Anyone betting that manufacturing will continue to lead the US economic recovery might think twice after reading comments from survey respondents in Dallas Fed’s April Texas manufacturing outlook.
Similar to Philly Fed’s gauge last week, Dallas headline number tanked, to 8.1 from 24.1 in March. The Philly survey’s headline number fell to 18.5 from 43.4 in March, but unlike the Dallas survey, Philly doesn’t include respondent comments in its report.
Down in Texas there’s a fair measure of cautious optimism among survey respondents, and plenty of concern about high costs and soft demand. Here’s one from a plastics and rubber products manufacturer that sounds pretty good:
“We are very encouraged by the breadth of activity with our cross section of customers in the Dallas–Fort Worth area. It is not just a few companies with increased requirements for plastic parts, but pretty much all of our diverse customer base.”
Now here’s one from the other end of the spectrum, a furniture/related product manufacturer: “Our industry has hit another brick wall. Rapidly increasing costs and fuel costs have shocked the consumer away from any nonmandatory spending. They normally adjust, but it may take several months.” Continue reading…
Peculiar that the stock market today so easily dismissed a worse-than-expected August ISM non-manufacturing report.
Not a big surprise that ISM services weakness is overshadowed by better-than-expected payrolls report, but the complete disregard for this stinker seems a little odd.
After August ISM manufacturing’s upside surprise Wednesday, the Dow Industrials busted a 250-point move higher, with economists and other pundits quick to suggest the better-than-expected data should shelve any concerns about a double dip.
The fact that severalregionalmanufacturingreports earlier in the month reported starkly different information was given little heed. “The contraction seen in some regional manufacturing surveys in August seems not to have been representative of the national manufacturing sector, as the ISM production index remains above-trend and the employment index was the highest since 1983,” Barclays Capital said this week.
Cut to today – the ISM services sector August gauge falls to 51.5 from 54.3, its lowest level since January and just a point and a half from slipping into contraction territory. The market flinched, juked and jived, but ultimately steadied and frolicked with the frisky euro again.
Stocks are rallying after a surprisingly (very surprisingly) strong manufacturing report, which added fuel to what was already a fire. But beware, September (and most months, really,) has a tendency to start off strong – and end very weakly. We break it all down on this morning’s Markets Hub.
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