The ISM Manufacturing PMI in the US fell to 52.8 in April 2019 from 55.3 in March, below market expectations of 55. The latest reading pointed to the weakest growth in factory activity since October 2016, amid slower increases in new orders, production and employment.
A slowdown was seen in new orders (51.7 from 57.4 in March), production (52.3 from 55.8) and employment (52.4 from 57.5). Also, new export orders fell into contraction territory (49.5 from 51.7) and prices eased (50 from 54.3). Meanwhile, inventories (52.9 from 51.8), backlogs of orders (53.9 from 50.4), and supplier deliveries (54.6 from 54.2) rose at a faster pace.
The weak US April PMI will cause the next GDP number to weaken since the PMI is a leading indicator.
In our previous analysis above, we had expected the employment sub-index to fall and the April PMI vindicated our view.
The weak PMI will force the US to strike a China-US trade deal as soon as possible or else the US economy will deteriorate quickly.
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