U.S. manufacturing PMI slides to 21-month low in March

Mar 24, 2019

The numbers:
The IHS Markit flash purchasing managers index for manufacturing in March fell to a 21-month low, while the services PMI weakened to a two-month low.

The flash manufacturing PMI fell to 52.5 from 53 in February, while the services PMI fell to 54.8 from 56.

Any reading above 50 indicates improving conditions. The “flash” reading is based on approximately 85% of the final number of replies received each month.

???? US Flash PMI falls to 6-month low of 54.3??, from 55.5 - Feb. Factory slowdown again apparent here, with goods production growth at 33-month low, but service sector growth also eased. Survey suggests growth will remain above 2% in Q1. More: https://t.co/bGpGqFs4M9 pic.twitter.com/27h2nXFl9F

— IHS Markit PMI™ (@IHSMarkitPMI) March 22, 2019

What happened:
New work rose at the weakest pace since April 2017, the report said, due to cautious spending patterns among clients and less upbeat business sentiment. The latest data pointed to the weakest increase in payroll numbers since June 2017, the report said.

Overseas readings were worse. The flash eurozone manufacturing PMI fell to a 71-month low of 47.6 in March, with Germany’s skidding to 44.7, a 79-month low for Europe’s largest economy.

The big picture:
With bond yields TMUBMUSD10Y, -0.18%  falling and the yield curve inverting, concerns about the U.S. and global economy are at the forefront of trader thinking, with the Federal Reserve responding this week cutting back its forecast of interest-rate hikes.

What they’re saying:
“A gap has opened up between the manufacturing and service sectors, however, with goods-producers and exporters struggling amid a deteriorating external environment and concerns regarding the impact of trade wars. The survey is consistent with the official measure of manufacturing production falling at an increased rate in March and hence acting as a drag on the economy in the first quarter” — Chris Williamson, chief business economist at IHS Markit.

Market reaction:
The Dow Jones Industrial Average DJIA, -1.77%  tumbled nearly 200 points in early action.
 

Source: MarketWatch