US May ISM manufacturing index 48.5 vs 49.1 expected

• Prior month 48.7
• Prices paid 52.1 versus 57.0 prior
• Employment 49.3 versus 51.1 last month
• New orders 49.3 versus 45.4 last month
• Production 48.5 versus 50.2 last month.
• Supplier deliveries 49.8 versus 48.9 last month
• Inventories 45.4 versus 47.9 last month.
• Backlog of orders 41.7 versus 42.4 last month
• New export orders 48.8 versus 50.6 last month
• Imports 48.5 versus 51.1 last month

The S&P PMI ticked slightly lower in June and this survey was more disappointing as it slipped to the lowest since February. The US dollar softened on the headlines but has quickly bounced back, perhaps due due to the better new orders number.

Comments in the report:

• “High volume of customer orders.” [Chemical Products]
• “Customers continue to cut orders with short notice, causing a
  ripple effect throughout lower-tier suppliers.” [Transportation
  Equipment]
• “Consumer demand and inventories are no longer stable at retail and
  food service establishments.” [Food, Beverage & Tobacco Products]
• “While orders are still steady, inventory from the previous month is
  enough to satisfy current- and near-term commitments.” [Computer &
  Electronic Products]
• “Customers ordering more to create buffer stocks (in case of) future
  shortages.” [Electrical Equipment, Appliances & Components]
• “Order levels in two of our main divisions are indicating weak
  demand, and now we must work to reduce inventory levels.” [Fabricated
  Metal Products]
• “Sales backlog is decreasing. We have furloughed a portion of our workforce as a result.” [Machinery]
• “The level of production is lower due to decreased demand for products.” [Miscellaneous Manufacturing]
• “Elevated financing costs have dampened demand for residential
  investment. We have reduced inventories of production components.” [Wood
  Products]
• “Orders have increased slightly due to seasonal restocking.” [Plastics & Rubber Products]

I’m carefully watching restaurants right now for a sign of weakening from the consumer, particularly after McDonald’s warned about consumers last month. Housing is certainly a drag as well and you can see that in some of the comments here.