US manufacturing disappointed again.
The marquee gauge of factory activity across the world’s largest economy came in below estimates for November in data released Friday.
At 46.7, ISM was unchanged from the prior month. Economists collectively expected a marginal improvement to 47.8. The range of estimates from 57 forecasters was 46 to 52.
It was the 13th month below the demarcation line that separates expansion from contraction.
Meanwhile, the final read on the S&P Global gauge for November, also released on Friday, was 49.4, unchanged from the flash estimate.
Both gauges attempted to turn up in recent months, but it was a false dawn.
“Companies are still managing outputs appropriately as order softness continues,” ISM’s Tim Fiore said. “Demand remains soft [and] suppliers continue to have capacity.”
ISM’s employment index dropped to 45.8, down from 46.8 and the lowest reading since July. New orders rose, but remained in contraction territory.
The prices paid index actually increased, and markedly at that to 49.9, up almost five points and the highest since April.
By contrast, S&P Global cited a “notable” easing in input costs. “Lower wage pressures, combined with a marked cooling of raw material input cost inflation, have already fed through to a lowering of average factory selling price inflation for goods to a rate below the average seen in the decade prior to the pandemic,” Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, wrote Friday, suggesting that softer goods pricing may help “further lower consumer price inflation in the months ahead.”
There’s no use spending an inordinate amount of time on these releases. The read-through is relatively straightforward: American manufacturing activity remains subdued, headcounts appear to be under pressure and notwithstanding the uptick on the ISM price gauge, goods prices will probably continue to contribute to disinflation.
In the context of last month’s macro zeitgeist and rates rally, the updates argued in favor of bond bulls, although the proximity of the releases to a fireside chat with Jerome Powell on Friday limited the data’s capacity to move markets.