US PMIs – tracking the economy in pictures
The ISM non-manufacturing and ISM manufacturing surveys were released on Wednesday and Monday respectively. The results are summarised below.
What follows is a graphic overview of these numbers in the context of the US economy.
The GDP-weighted PMI for new orders is rolling over and indicates year-on‑ year GDP growth of approximately 2.5% (2.7% quarter on quarter annualised).
The Manufacturing PMI for production indicates that industrial production is currently 5% higher than a year ago.
At approximately 74%, manufacturing capacity utilization is currently 5% higher than a year ago.
The shedding of jobs has come to an end with the GDP-weighted PMI moving above 50 for the first time since end 2007. The unemployment rate is set to moderate further.
The non-manufacturing sector is still cutting jobs but at a significantly reduced rate, while employment in the manufacturing sector has improved markedly.
Non-farm payroll employment in February (announced later today) is likely to register a positive number.
Business continues to reduce inventories, resulting in the level of inventories to sales falling to near historical lows.
The continued reduction of inventories will impact negatively on GDP growth in the first quarter.
But it will relieve upside pressure on the CPI somewhat.
However, high energy prices will continue to exert upward pressure on prices paid by industry.
The GDP-weighted PMI for prices indicates that the CPI is approximately 3% higher than a year ago.
But, the CPI number could surprise on the upside and come in at 4% due to the strong oil price.
Note: All graphs used in this post were provided by Plexus Asset Management (based on data from I-Net Bridge and ISM).
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