The ISM manufacturing survey came in at 50.2 (median forecast 50), just above the breakeven level, matching nearly 50 in October. Thus, the industrial sector lost some more momentum than the previous index value of 50.9. PMI fell to the lowest level since May 2020. Of course, the details hidden in the data are more important than the psychological 50 level.
If we look at the sub-items; Stocks fell from 55.5 to 52.5, indicating a slowdown in the rate of increase. Production rose from 50.6 to 52.3, new orders rose from 47.1 to 49.2 and employment rose from 48.7 to 50. The rise in employment, orders and production is a striking positive detail under this weak headline data. On the other hand, despite the increase in new orders, they are still in the contraction zone. The headline drop is largely focused on better supply chain performance, making it a negative but more favorable signal for the overall index. Supplier deliveries fell from 52.4 to 46.8, the lowest level since 2009. This, of course, comes from a situation related to the supply chain. Customer stocks remained unchanged at 41.6. Prices paid fell from 51.7 to 46.6, the lowest level since May 2020. Commodity prices and shipping costs are of course effective in this item. Pending orders fell from 50.9 to 45.3, new export orders fell from 47.8 to 46.5 (reflecting the contraction deepened and the global economy headed for recession), imports fell from 52.6 to 50.8.
Regional surveys point to index values close to 50… Source: Regional Fed banks, ISM, Bloomberg Economics
Three of the four major regional Fed manufacturing surveys available so far weakened in October compared to the ISM. As comforting factors, we can cite the participants’ reporting of better delivery times from suppliers (positive for the supply chain) and disinflationary trends in the goods sector (positive for the inflation outlook). A drop to the low 40 range would be required for the ISM to signal an economy-wide recession, but a slide below 50 would of course increase recession speculations.
If we look at the Fed’s point of view; There is no perception of change in terms of the November meeting. A 50 basis point Fed increase in December is more likely than 75.
Kaynak: Tera Yatırım-Enver Erkan
Hibya Haber Ajansı
