Manufacturing Employment Index Back Below 50 As ISM Decelerates From Peak

ISM manufacturing, the first of this week’s top-tier data out of the US, was a miss.

At 57.5, November’s print came in a touch below consensus (58) and well shy of October’s blistering 59.3 mark.

The range, from more than five-dozen economists, was 56.5 to 60.

Some argue manufacturing will prove resilient even as COVID cases multiply and new lockdowns proliferate thanks to shifting consumption patterns and the idea that factories are one step removed from the pandemic’s “frontline.”

The final read on IHS Markit’s manufacturing gauge for November, also out Tuesday, matched the upbeat flash print, while last week’s durable goods report offered several upside surprises.

Looking at the subindexes on ISM, production dropped, as did new orders. Notably, employment sank sharply, falling below the 50 demarcation line.

Customer inventories sank to a decade low, while backlogs rose to the highest since August of 2018 and new export orders hit the highest since March of that year.

Most of these prints still suggest robust activity, but there’s an inkling of lost momentum. The sub-50 employment reading is perhaps a bit disconcerting, especially considering the scope for services sector employment to come under pressure amid new virus lockdowns.

In any case, this isn’t going to change any hearts or minds. Whatever your narrative was, it’s still “intact” — if only in your imagination.