Urethane Blog

Manufacturing Strength

November 23, 2016

US Manufacturing PMI Rebounds To 13 Month Highs On Post-Election Optimism, Decouples From Production Slump

Following the bump in Eurozone PMIs this morning, Markit reports November US manufacturing at 53.9 (better than 53.5 expected) and its highest since Oct 2015, showing “further signs of factories and their customers moving away from destocking to inventory-building amid a more optimistic outlook.”

However, hope in the PMI survey seems to be decoupling from reality in actual production.

 

Under the covers, everything looks awesome with new orders rising (highest since Oct 2015), employment spiked to one of the largest of the year, and output jumped to its highest since March 2015.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“US manufacturers enjoyed a strong post-election bounce in November, further tilting the scales toward the Fed hiking rates in December. Many factories reported that demand from customers had picked up as uncertainty about the election result cleared. Domestic demand rose especially sharply, helping to make up for subdued export growth, linked in turn to the strong dollar.

 

“The survey also found further signs of factories and their customers moving away from destocking to inventory-building amid a more optimistic outlook, accompanied by an upturn in hiring. The increase in employment was one of the largest seen so far this year.

 

“Inflationary pressures remained muted, with average prices charged barely rising, despite some further upward movement in many commodity prices.

 

“The buoyant post-election picture of the manufacturing economy and signs of increased optimism about the future will further fuel the conviction that the Fed will raise interest rates at its December 14th meeting, and may also raise the possibility that policymakers might be inclined to tighten somewhat more aggressively in 2017 than previously thought, although much of course also depends on the new government’s policy framework.”

http://www.zerohedge.com/news/2016-11-23/us-manufacturing-pmi-rebounds-13-month-highs-post-election-optimism-decouples-produc

RSS Sign Up for Email Updates