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Another Poor Regional Fed PMI Release

Another Poor Regional Fed PMI Release by Eric Bush, CFA, Gavekal Capital

So far the data points released for US manufacturing in September have been downright negative. The Richmond Fed PMI was released this morning and came in well below expectations. The headline index was -5 with the consensus looking for something around 3. This comes on the heals of the Philly Fed PMI which declined from 8.3 in August to -6 in September and the Empire State Manufacturing PMI which remained very negative at -14.7. The Empire State Manufacturing PMI feel to -14.9 in August from 3.9 in July.

Fed PMI

For the Richmond Fed, the headline number is the lowest since January 2013. Of concern, there was a very large drop in both backlog of orders and average workweek. This may help explain partially why the Fed didn’t raise rates last week. The backlog of orders and average workweek both fell to its lowest level since April 2009.

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We will have quite a few releases over the next week or so to see if they all confirm the weakness so far in September. Tomorrow, we get the Markit Flash Manufacturing PMI. On Thursday we will see the Kansas City Fed Manufacturing Index. On Monday, we will see the Texas Manufacturing Survey. A week from Wednesday we will see the Chicago PMI and a week from Thursday we get both the Markit Manufacturing PMI and the ISM Manufacturing Survey. Finally, we won’t see the official Industrial Production release for September until October 16th.