Though there’s not much to add, it’s worth bringing this up again. In the era of gigantic positives, why aren’t sentiment surveys so much more positive than they are? It’s because these PMI numbers aren’t what you’re being told they are. After such a huge contraction, mid-50’s is a bomb; mid-50’s (the best ones) in August 2020 is a real concern. Seeing these numbers, everyone should be asking instead, where’s the uniform acceleration and pickup?
The ISM’s Manufacturing Index tacked on another 1.8 points to rise up to 56.0 last month. That’s the highest since November 2018, which isn’t anywhere close to as good as it might sound. From this time last month:
The way the Institute for Supply Management (ISM) versions are being reported, however, these other must be describing an entirely different set of circumstances… Quite the contrary, even for both of the ISM’s, for them to be back even only to the same level of March or February 2019 isn’t exactly a reassuring outcome. Does anyone remember the winter of 2019? If that wasn’t bad enough, following the scale and depth of contraction the US economy is trying to find its way out from, these PMI’s should be (actually) skyrocketing and quickly.
That’s why if the economy was turning around as robustly as the PMI’s are being interpreted as suggesting, then we wouldn’t have the ISM reporting more manufacturers are still cutting jobs than those that are rehiring again.
This isn’t just a weird discrepancy; it’s the only one that matters. An ISM at 56.0 this far into 2020 isn’t near enough of a widespread turnaround and it seems like the manufacturers themselves concur.
