Manufacturing & Exports: The Good, The Bad & The Ugly
The ISM’s US manufacturing surveys are widely recognised gauges of economic health. They’ve taken us on a ride in recent months.
It started in December, when the Manufacturing Index fell a large 4.5 percentage points to 54.3. The drop coincided with a volatile month in the markets and seemed to confirm fears about slower growth.
Then January brought good news. The index reading was solidly expansionary, rebounding to 56.6. Market consensus had expected a further decline, so the surprise gain was welcome.
But January also brought bad news. Despite the bounce, the January reading was the lowest in the past 17 months (except for December 2018). Manufacturing is showing some age. Fed rate hikes, oil price fluctuations, weakness in major trading partners, and protectionism have taken a toll. The month-long federal shutdown didn't help.
As for the ugly, that came courtesy of a separate index—the New Export Orders Index. It worries me that New Export Orders fell from 52.8 to 51.9 in January, a two-year low and just barely expansionary. It is no news that major trading partners are shaky, and the US dollar is relatively strong. Exports got hit.
It would help a lot if the US weren't doing so much of the heavy lifting in keeping the world economy afloat. It is hard to be optimistic about the trade deficit.
The information in this article is provided for general information purposes only and does not take into account the investment objectives, financial situation or needs of any person. Investors Mutual Limited (AFSL 229988) is the issuer and responsible entity of the Loomis Sayles Global Equity Fund (‘Fund’). Loomis Sayles & Company, L.P. is the investment manager.
This information should not be relied upon in determining whether to invest in the Fund and is not a recommendation to buy, sell or hold any financial product, security or other instrument. In deciding whether to acquire or continue to hold an investment in the Fund, an investor should consider the Fund’s product disclosure statement, available on the website www.loomissayles.com.au or by contacting us on 1300 157 862. Past performance is not a reliable indicator of future performance.
Investment in the Fund are not a deposit with, or other liability of, Investors Mutual Limited and are subject to investment risk, including possible delays in repayment and loss of income and principle invested. Investors Mutual Limited does not guarantee the performance of the Fund or any particular rate of return.