According to the Markit Flash Manufacturing PMI survey, manufacturing activity in the US declined for the first time since September 2009.
Key Points
- Headline PMI edges down again in May as production declines for the first time since September 2009
- New orders expand at slowest rate in 2016 so far
- Inflationary pressures pick up
Manufacturing Output
Manufacturing Employment
Markit Chief Economist Chris Williamson’s Comments
- “The weak manufacturing PMI data cast doubt on the ability of the US economy to rebound from its disappointing start to the year in the second quarter. The survey is signalling that manufacturing will act as a drag on economic growth in the second quarter, leaving the economy once again dependent on the service sector, and consumers in particular, to sustain growth.”
- “Output is falling for the first time since the height of the global financial crisis, with factories hit by slowing growth of order books and falling exports. Backlogs of work are also dropping at the fastest rate since the recession, meaning firms will be poised to cut capacity unless inflows of new work start to pick up again.”
- “The survey’s employment gauge is in fact already running at a level consistent with a further reduction in the official measure of factory payroll numbers.”
- “Any uplift in prices was largely due to higher commodity prices, notably oil. Core price pressures look to have been once again subdued by weak demand.”
The manufacturing recession clearly shows no signs of improvement.
Mike “Mish” Shedlock
SSHHH! There’s an election coming.
Biggest energy and refining boom in world History and nothing to show for it sure is confusing to me.
Proof it’s time to raise interest rates. Low rates of the stature we are experiencing are equally as large as abomination as NIRP for deposits.Wall street may love it because a few traders can exploit them, but nobody else.
You can’t cure the problems caused by low interest rates by keeping them low. Raising them will cause the dislocations created by low interest rates to un-do themselves and Wall Street will scream bloody murder when they correct. But higher rates will reward savers who will spend the interest and ultimately raise the PMI. Claiming raising interest rates is recessionary is doofus reasoning in this artificial environment. Keeping them this low is slow death.
Someone with the guts of Volcker is needed to do the job. The current milquetoast FOMC will do nothing to little to fix it since they and their idiotic theories are the reason the PMI is falling.
Nobody gives a crap about anyone who borrowed using adjustable rates and assumed the party would last forever. Sorry for those who bought fixed rate debt and didn’t intent to hold to maturity, but not enough to want to keep rates low on your behalf. You lose.
Like Krugman, you are barking up the wrong tree with Keynesian remedies. Volcker raised interest rates to fight inflation. FED now wants to fight price deflation, and is clueless as to the real causes. Interest rates should revert to free market all around. Zero interest rates are the creation of the Central Planning Politburos and Central Banks around the world. Without totalitarian control and central planning, negative interest rates would remain an abstraction. More central planning (e.g. of interest rates) cannot possibly be the remedy for too much central planning and control.
Interest rates and monetary policy, the Keynesian remedies, will likely make minimal difference this time around. The economic system has developed a tolerance or resistance to the Keynesian remedies. The economic body has burned out on Keynesian methamphetamines. Sure, raising interest rates will have some effect, like putting some cash-strapped manufacturers dependent on borrowing out of business (for better or worse). But mostly this is not a Keynesian problem, and it will be too little interest income too late for savers.
Higher interest rates plus government mandates for higher wages and benefits (e.g. Obamacare) are just part of the mix making manufacturing more expensive. Trump complains about Nabisco sending Oreo jobs offshore, but a major reason is USA price controls (e.g. sugar subsidies, tariffs on sugar imports) making sugar prices several-fold higher in the USA than in worldwide free markets. Call that protectionism for USA sugar growers at the expense of manufacturing jobs in industries using sugar. Absolutely nothing Keynesian in any of this, which is why interest rates and QE will do little.
Anybody saying the economy is in decline is peddling fiction.
Total USA Sales of Electricity million kWh
Feb 2016 612,269
Feb 2015 630,890
Source EIA
You’re clearly trying to confuse these ideologues with the facts. Very cunning.