Fastest Manufacturing Expansion Since Jan
2019
IHS Markit reports the Manufacturing PMI is expanding at the fastest pace since January of 2019.
Five Key Points
- Overall growth is the strongest since early 2019.
- Faster increases in output and new orders
- Input costs rose sharply amid supplier price hikes and raw material shortages.
- Firms were able to partly pass on higher cost burdens through a modest increase in selling prices.
- Firms indicated a renewed rise in employment for the first time since February. The rate of employment growth was the joint-fastest since March 2019.
Chris Williamson, Markit Chief Business Economist , Comments
- “The manufacturing upturn gained further ground in August, adding to indications that the third quarter should see a strong rebound in production from the steep decline suffered in the second quarter.
- “Encouragingly, new order inflows improved markedly, outpacing production to leave many companies struggling to produce enough goods to meet demand, often due to a lack of operating capacity. Backlogs of uncompleted work consequently rose at the fastest rate since the early months of 2019, encouraging increasing numbers of firms to take on more staff.
- “Key to the upturn was a jump in new export orders, which rose at the fastest rate for four years, reflecting improving demand in many foreign markets, and benefitting larger companies in particular. Disappointingly, new orders and export sales at smaller manufacturers continued to fall, highlighting an unbalanced recovery in favour of larger firms.”
The uneven recovery fueled by cheap money continues.
Coming up, I have a report from ISM that looks a lot different, especially on employment.
Mish
There are easily 15-20 million unemployed no matter what the report says on Friday.
Do not confuse your local conditions with national reality.
For example every restaurant here is every other table,, and this is Utah.
Now think about Chicago, NYC, LA, etc.
I live in the L.A. area and people are eating outside. Granted, weather allows that 330 days a year here, and I do have concern for interior states. I just drove through Utah, ate at the Culvers in St. George, on my way to Iowa. Stayed the night in Salinas and the motel was 3/4 full on a Tuesday night. Things were pretty normal as far as I could see. The interstates were busy with cars and semi’s.
I understand a number of restaurants and shops have not/will not make it being forced to be closed.
I agree with some others here, I’ve been reading your blog over 10 years and your tone is changing.
More people are on the road because passenger airlines have cratered. It is really more like the recession after 9/11 where air travel was so bad for a year. The only thing that has kept things up is the money drops by the Fed to keep asset prices and commodity prices up.
“More people are on the road because passenger airlines have cratered. ”
True but at the same time, they aren’t “skipping the airline” between Pasadena and Rancho Cucamonga.
Yes but instead of going to Cabo San Lucas they are staying in the country on the road.
I think it more like 30M if you count the underemployed. Working 1 hour a week isn’t really working. If Trump were smart he would bail out the states and have the economy in a better position by election day.
I don’t have the answer, but some thoughtful and relevant future trend prediction would be nice. I’m sure people thought it was over in 1929. My grandparents didn’t know what would happen while the Great Depression was happening. Moral of the story? Big Bad Wolves come along every so often and better times come after.
I think the timing is very important for the next Package. It wouldn’t have the same effect in September as it will in the middle of October. I expect the Republicans to cave and give a sizable unemployment bonus along with backpay.
Also a large check will be cut to most Americans. It’s about the timing.
It can’t be that bad out there, the 210 Freeway is back to having traffic on the way home every day. I see an awful lot of new car temporary licence plates, and home values are up 10% this year. The area I live (Inland Empire) is warehouse central and the parking lots are full of employees. There was a ridiculous line to get into Target this past Sunday, I said ‘no way’ and left. Where are the “20 million unemployed?”
One thing I’ve noticed on the coasts is there is a huge element of income from the stock market. People in the middle of the country tend to be more conservative even when it comes to risk taking with money. They want the 9-5 job with upper middle class lifestyle and playing golf. People on the coasts are gamblers by nature. They go gambling on weekends for fun.
It’s an ecosystem. Without the bottom (feeders) to contribute nutrients(money) the ecosystem will start the break down. The question is how much bottom is needed to sustain the top.
The ecosystem will love on for sometime but is depleting it’s nutrients. Once the process starts it’s very hard to slow it down because the top also feeds the bottom with its waste. The top is less important and only serves to speed up the process.
Interestingly an ecosystem can survive without the top of the food chain but without the bottom it will die.