December ISM manufacturing data

ISM manufacturing
  • Lowest since June 2009
  • Prior was 48.1
  • New orders 46.8 vs 47.2 prior -- lowest since April 2009
  • Prices paid 51.7 vs 47.8 expected
  • Prior prices paid 46.7
  • Employment 45.1 vs 46.6 prior
  • Full report

The headlines speak for themselves. This is a very weak reading and puts a dent in the idea that rate cuts are going to spur a reversal in manufacturing. The US-China trade truce wouldn't quite be fully captured by this month's data but you have to hope it can turn it around.

Comments in the report:

  • "Backlog of orders is shrinking due to new order pace continuing to fall." (Computer & Electronic Products)
  • "Due to sluggish sales, we have introduced promotions to generate increased sales." (Chemical Products)
  • "Cautiously optimistic is the rule these days. Sales are decent, but we're wondering what 2020 will bring. Still hedging that it will be successful - but maybe not as much as this year." (Transportation Equipment)
  • "Starting to see suppliers try to pass on costs associated with tariffs. Uncertainty on the trade front continues to keep agricultural markets on the defensive." (Food, Beverage & Tobacco Products)
  • "Down month-to-month, but up over last year." (Miscellaneous Manufacturing)
  • "Anticipated large export orders did not materialize. As a result, expected U.S. production has decreased." (Fabricated Metal Products)
  • "Dealer inventories have rebounded, and overall customer market has softened, resulting in corrections to near-term production schedules and a tentative forecast outlook." (Machinery)
  • "Export markets continue to weaken for plastic resins - Mexican producers are actually trying to sell product back into the U.S. due to weak in-country demand." (Plastics & Rubber Products)
  • "Our outlook for the first quarter of 2020 is positive. We have secured contracts from a number of former customers and expect sales growth of about 5 percent over Q4 of 2019." (Textile Mills)
  • "The construction market seems to have slowed for end of year. Overall, it's marginally up." (Nonmetallic Mineral Products)

Overall these comments are more-constructive than the headline but there is a theme of poor orders.

"Global trade remains the most significant cross-industry issue, but there are signs that several industry sectors will improve as a result of the phase-one trade agreement between the U.S. and China. Among the six big industry sectors, Food, Beverage & Tobacco Products remains the strongest, while Transportation Equipment is the weakest. Overall, sentiment this month is marginally positive regarding near-term growth," says Timothy Fiore, Chair of the Institute for Supply Management.