The one stalwart of the domestic the past two years has been the shrunken manufacturing industry.  However, last month it began to show a slowdown - which consistent with what we are seeing worldwide, accelerated recently as ISM just reported a 53.5 print, versus expectations of 57.1.  To put it into perspective last month was a reading of 60.4.  This is the worst print in over a year and a half.   Of course any figure over 50 is expansionary but this type of slowdown is quite significant.

Looks like higher oil prices, the Chinese slowdown, and Japan are really putting a dent in world growth.

Somewhere Ben Bernanke must be sweating.... and my call for QE3 this late fall/winter is gaining strength. [May 19, 2011: Prepare for a Fed Hike.... in 2018? So Says Goldman Sachs] (although it will most likely hurt the economy further)

On the positive side - prices fell sharply.

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From the respondents:

  • Chemical prices are under increasing cost pressure, driven by feedstock and transportation costs. (Chemical Products)
  • Continued growth through beginning of second quarter, with strong backlog and outlook for at least the next three months. (Electrical Equipment, Appliances & Components)
  • Business levels remain strong — better than last year by 20+ percent, but not back to 2008 or early 2009 levels. (Fabricated Metal Products)
  • Demand remains strong; however, inflation is evident everywhere in virtually every material purchased. (Paper Products)
  • Bad weather is impacting retail business. (Printing & Related Support Activities)
  • Business is still strong, but we are more aware of a possible softening than previously. (Machinery)

MANUFACTURING AT A GLANCE

MAY 2011

Index

Series

Index

May

Series

Index

April

Percentage

Point

Change

Direction

Rate

of

Change

Trend*

(Months)

PMI53.560.4-6.9GrowingSlower22
New Orders51.061.7-10.7GrowingSlower23
Production54.063.8-9.8GrowingSlower24
Employment58.262.7-4.5GrowingSlower20
Supplier Deliveries55.760.2-4.5SlowingSlower24
Inventories48.753.6-4.9ContractingFrom Growing1
Customers' Inventories39.540.5-1.0Too LowFaster26
Prices76.585.5-9.0IncreasingSlower23
Backlog of Orders50.561.0-10.5GrowingSlower5
Exports55.062.0-7.0GrowingSlower23
Imports54.555.5-1.0GrowingSlower21
OVERALL ECONOMYGrowingSlower24
Manufacturing SectorGrowingSlower22

*Number of months moving in current direction.

Full data.