Manufacturing Conditions Still Hot, Construction Still Lukewarm
* The ISM Manufacturing Index for September eased to a still-strong 59.8 percent.
* Construction Spending in August inched up by just 0.1 percent.
The ISM Manufacturing Index for September eased from a very strong 61.3 in August, to a still-strong reading of 59.8 in September, indicating very good conditions for U.S. manufacturers. Nine out of ten sub-indexes were in expansion territory, including new orders, production, employment and new export orders. Both new orders and employment increased from last month. Only the customers’ inventories sub-index was below the break-even 50 mark. Of the 18 reporting industries, 15 said that they were growing in September. Only primary metals reported contraction in September. Anecdotal comments show a high level of concern about trade tariffs. The just-announced U.S.-Mexico-Canada Trade Agreement will help to reduce some of the uncertainty, but it remains to be ratified by all three countries. Also, the new agreement does not address a key source of trade uncertainty…U.S.-China relations. In addition to impacting pricing, trade tariffs are leading to fluctuations in import and export volumes and in inventories for many companies.
Total construction spending for August inched up by 0.1 percent following a 0.2 percent gain in July. Over the previous 12 months, construction spending was up by 6.5 percent, on the low side of average for an expansion cycle. Private residential spending fell by 0.7 percent in August. Private nonresidential dipped by 0.2 percent. Total public construction spending gained 2.0 percent for the month and was up by 14 percent.
Market Reaction: U.S. equity markets opened with gains. The yield on 10-Year Treasury bonds is up to 3.08 percent. NYMEX crude oil is up to $73.08/barrel. Natural gas futures are down to $3.08/mmbtu.
For a PDF version of this report, click here: September 2018 ISM MF Index, August Construction Spending
The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or soliciting any transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.