US: Manufacturing weakens further – ABN AMRO

Bill Diviney, senior economist at ABN AMRO, points out that the US ISM manufacturing PMI fell to 52.1 in May, the lowest since October 2016.

Key Quotes

“A modest rise in new orders and new export orders was more than offset by a further drop in the production index to 51.3 from 52.3, suggesting the manufacturing sector has continued to weaken in Q2 after an already soft Q1. While optimists might draw comfort from the slight (1-point) rise in the forward-looking new orders component, at 52.7 the index remains well below the post crisis average of 57.2, suggesting a weak outlook for investment.”

“Moreover, the report reflects responses gathered prior to the latest threat from President Trump to impose tariffs on Mexican imports. In light of this threat, we are currently reviewing our scenarios for global trade, and expect to downgrade our US economic growth forecasts in the coming days (currently 2.3% for 2019, and 1.9% for 2020).”