Little Action As US Manufacturing Reports Show Contradictory Figures
On Friday we saw a jump in the US manufacturing PMI, leaving recession behind, but today Dallas manufacturing activity sank further
The market was slow to start the new week, with traders being cautious after economic figures and price action were mixed last week. Major currencies didn’t see much movement, although the US dollar started slipping lower earlier today. USD/JPY saw gains despite Treasury yields and the USD being slightly lower though which shows that risk sentiment is slightly positive.
EUR/USD is up by around 60 pips, trading at 1.1030s, while AUD/USD has gained only around 20 pips. European equities started off weaker, but gradually pared losses to close almost unchanged at the European session close. The mixed data from the US continued today, with the Dallas FED manufacturing index falling to new lows after some strong manufacturing PMI numbers last Friday.
This sort of mixed data is keeping markets uncertain. Ahead of the Dallas manufacturing figures we saw a positive revision in the US retail sales for March.
Dallas-Area Manufacturing Sentiment Survey
- April Dallas FED manufacturing PMI -23.4 points vs -15.7 prior
- Prior Dallas FED manufacturing PMI was -15.7 points
- Production output +0.9 points vs +2.5 prior
- New orders -9.6 points vs -14.3 prior
- Shipments -2.8 points vs -10.5 prior
- Prices paid +19.5 points vs +20.3 prior
- Prices received +8.4 points vs +7.0 prior
- Company outlook -15.6 points vs -13.3 prior
- Employment +8.0 points vs +10.4 prior
This is the lowest reading since July but the underlying numbers aren’t as bad as the headline as there are bright spots. Some of the comments in the report highlight availability problems, which is something the FED is watching:
- The first quarter came in about as expected; all markets weakened with the exception of automotive. There are signs that inventories are building quickly in auto, so expect that market to weaken soon.
- We have already been notified that our credit line renewal may be difficult. Our monthly increase in costs (rate) is at highs not seen since 2007.
- Funding has dried up to purchase our products.
- There is a definite slowdown. New orders virtually stopped.
- We are starting to see a real slowdown. We are hoping it is short-lived
- Almost all of our customers have high inventories from overbuying last year. So, they are all cutting back on ordering new inventory.
- Business has gotten stupidly slow, and we estimate having many days of just a few hours of work due to low volume. This is crazy—as busy as we were last year, and now for this year to have it turn off so quickly, it is hard to understand why. We hear from many others in our industry, and they are all saying the same thing: that it’s gotten slower without any signs of turning around in the near term. Perhaps it’s the Federal Reserve’s actions that are causing this.
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