The "seasonal" manufacturing activity slowdown in the U.S. is on schedule. It is visible not just in the Markit PMI measure (below), but across other national and regional indicators as well.
Here are some recent news quotes on the subject:
- CSM: The Federal Reserve said that U.S. factories cut back sharply on production in April, as automakers produced fewer cars and most other industries scaled back.
- IBT: On Wednesday, the Institute for Supply Management said a key index of U.S. manufacturing fell more than expected in April. The ISM's purchasing managers index fell to 50.7 from March's 51.3, more that the 50.9 expected by analysts polled by Thomson/Reuters I/B/E/S.
- MarketWatch: Manufacturers in the Philadelphia region reported fewer orders for their products in May and became skittish about hiring new workers, offering further evidence the economy is struggling to grow.
- Investing.com: Manufacturing activity in the State of New York fell unexpectedly last month, official data showed on Thursday. In a report, Federal Reserve Bank of New York said that Empire State manufacturing activity fell to a seasonally adjusted -1.4, from 3.1 in the preceding month.
But no worries. Why bother with manufacturing when U.S. personal consumption remains firmly above 70% of the GDP.
The conventional wisdom goes that if the consumer is happy and in a spending mood, the U.S. economy should grow. Given the ongoing rally in housing and stocks, American consumers seem quite happy indeed. Consumer sentiment hit a post-recession high this month (chart below). Now we just have to see if this happiness translates into sales.
Given these improvements in consumer sentiment, nobody seems to care much about the manufacturing slowdown. The consensus seems to be that the U.S. consumer will come to the rescue once again.