Low momentum in the US

The Markit index for the manufacturing sector was marginally down in August. It was at 52.1 versus 52.9 in July. The average for the first two months of the third quarter is 52.5 versus 50.9 for the second quarter.  There is an acceleration of the manufacturing activity between the second and the third quarter. This was seen also in the manufacturing index that was published by the Federal Reserve last week.
Nevertheless this stronger pace will be transitory.
The graph below show the strong consistency between the Markit index and the manufacturing Production Index from the Federal Reserve. The lower index in August suggest that the width of the recent acceleration will be limited.
us-2016-august-markit-ipi.png
The new orders dynamics is also limited. The ratio of new orders to inventories is above  1 but is not accelerating.
us-2016-august-markit-ratio.png
In other words, there are no pressures on the economy and that’s the main reason for the Fed to maintain its current strategy.

One thought on “Low momentum in the US

  1. Pingback: Pas de surchauffe aux USA – Ma chronique macroéconomique | Le Blog de Philippe Waechter

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s