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Manufacturing surged in August as measured by the ISM by 61.3 from an expected 57.6. However that is just half the story, 15 minutes earlier US August final Markit Manufacturing  was reported as the lowest since November 2017  with PMI 54.7 vs 54.5 expected. Sceptism should be applied to both reports.

ISM Manu August

Image via Nick Burwell ‏ @NickBurwell1

US August ISM Manufacturing Index

  • Main Index 61.3 vs 57.6 expected, Prior 58.1 Highest since 2004
  • Prices paid 72.1 vs 73.2 prior
  • Production 63.6 vs 58.5 prior
  • New orders 65.1 vs 60.2 prior
  • Inventories 55.4 vs 53.3 prior
  • Employment 58.5 vs 56.5 prior
  • New export orders 55.2 vs 55.3 prior
  • Imports 53.9 vs 54.7 prior

US August final Markit Manufacturing PMI 

  • Main Index 54.7 vs 54.5 expected, Prior 55.3 Lowest since November 2017
  • New orders 54.9 vs 54.6 prelim & prior 55.1

 What is with the big divergence between this ISM report and the Markit manufacturing survey, which is at the lowest since November 2017.

The Spread between America's ISM Manufacturing PMI and the Markit Eurozone PMI swells to a record. @LJKawa

Comments from the ISM report:

"Busy for new orders, but the cost of raw material chemicals keeps going up." (Chemical Products)

"We have seen a slight uptick in international business. Suppliers do not seem to know how to handle the recently imposed tariffs. Most are waiting to re-evaluate potential price increases until September." (Computer & Electronic Products) "

Generally high levels of demand continue, and [we are] planning for this elevated rate through the rest of the year." (Transportation Equipment)

"Suppliers appear to be bracing us for cost increases, given increased talk of tariffs and inflation. We are budgeting for 2019 accordingly." (Food, Beverage & Tobacco Products)

"The toughest thing we deal with is the unknown. Dealing with tariffs on steel purchases and not knowing if or when they will end makes planning difficult. We are entering the period when we begin our pricing negotiations for next year and will likely treat the tariffs as if they will be here for the entire year. It's challenging, but not insurmountable." (Fabricated Metal Products)

"Business is positive, new equipment sales and inquiries are strong, and the parts business is strong. Raw material costs, especially steel, appear to be leveling off. Cost of manufactured components has also leveled off. Most suppliers are willing and able to suppress cost increases. Tariff impacts are still a concern." (Machinery)

"Business continues to be strong. We anticipate growth in the next few months." (Plastics & Rubber Products)

"Business conditions are strong. Orders are up. Purchase prices are up. Unemployment is down." (Miscellaneous Manufacturing)

"Continued strong demand has most locations in a sold-out market, putting pressure on our facilities to produce and have strong uptime. Purchasing is under pressure to provide critical parts in a market where lead times have increased." (Nonmetallic Mineral Products)

"Steel tariffs and their threats are putting upward pressure on downstream materials." (Petroleum & Coal Products)

Source: ISM, Bloomberg

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