Friday's economic also-rans: PMI, construction spending

Reuters

Friday's economic also-rans: PMI, construction spending

2024年11月1日，GMT下午4:01

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Main U.S. indexes sharply higher; Nasdaq, both up >1%

Cons Disc leads S&P sector gainers; Utilities down most

Euro STOXX 600 index up 1.3%

Dollar rises; gold ~flat; crude, up >1%, bitcoin dips

U.S. 10-Year Treasury yield rises to ~4.35%

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FRIDAY'S ECONOMIC ALSO-RANS: PMI, CONSTRUCTION SPENDING

Friday's jobs report - and its jumbo-sized consensus miss - set market participants' minds reeling; investors could think of little else.

But the Labor Department isn't running the only show in town.

The Institute for Supply Management (ISM), for example, released its purchasing managers' index (PMI) for October USPMI=ECI, which showed U.S. factory activity unexpectedly contracting at an accelerated pace.

ISM PMI shed 0.7 points to land at 46.5 instead of creeping up 0.4 points to 47.6 as analysts expected.

A PMI reading south of 50 signifies a monthly contraction.

Clawing beneath the topline number, the deterioration of new orders and employment slowed down a bit, but production worsened and prices paid - a potential inflation predictor - heated up.

"We are skeptical that the sector’s fortunes will start to improve meaningfully any time soon, despite October’s uptick in new orders," writes Oliver Allen, senior U.S. analyst at Pantheon Macroeconomics. "Most survey measures of investment intentions remain very depressed, bank credit remains scarce, corporate bond yields relatively high, and external demand is too weak to shift the dial significantly."

"For now, manufacturing is clearly struggling."

Among the survey respondents' comments, worries about the coming election loomed large.

Remarks like "contingency plans have been formulated to anticipate trade policies," and "uncertainty in the outcome of the upcoming election has resulted in several risk analysis studies" are peppered throughout.

Here's a breakdown of headline PMI and select components:

S&P Global also unveiled its take on manufacturing PMI USMPMF=ECI, which showed some improvement, to 48.5 from its preliminary "flash" 47.8 reading issued a few weeks ago.

In a separate report, U.S. expenditures on construction projects USTCNS=ECI unexpectedly increased by 0.1% in September, coming on the heels of August's upwardly revised 0.1% growth (was previously unchanged).

Breaking the numbers down, government funded projects rose by 0.5%, while private sector outlays were flat.

The closely watched residential line item rose by 0.2%, a positive sign for the struggling housing market.

But Carl Weinberg, chief economist at High Frequency Economics warns of a challenging road ahead for construction spending, particularly in private non-residential and single family home construction.

"Lower policy interest rates will help, but it will take time for that to happen," Weinberg says. "Rates have to get low —simply falling interest rates have a different impact on construction than low rates — before projects will pick up with any vigor."

(Stephen Culp)

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FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:

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U.S. STOCKS RISE AFTER PAYROLLS AS AMAZON LEADS - CLICK HERE

U.S. STOCK FUTURES ADD SLIGHTLY TO GAINS, YIELDS FALL, AFTER JOBS DISAPPOINT - CLICK HERE

COULD OCTOBER PAYROLLS BE NEGATIVE? - CLICK HERE

EUROPEAN EARNINGS: BETTER BUT STILL MIXED - MORGAN STANLEY - CLICK HERE

UK GILTS: TRUSSED UP? - CLICK HERE

EUROPEAN SHARES BOUNCE, STILL SET FOR WEEKLY FALL - CLICK HERE

EUROPE BEFORE THE BELL: FUTURES STEADY BEFORE JOBS DATA - CLICK HERE