November 11, 2022 11:17 GMT
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In October, the ISM manufacturing survey recorded a third consecutive month of contracting new export orders.
- Prior to August 2022, the last recorded contractions in the ISM new export orders subindex were during the initial pandemic shock period of March to June 2020. A slowdown in European activity and weak Chinese growth amid Covid lockdowns are currently underpinning the continued decline in orders.
- With the US dollar at multi-decade highs and domestic inflation seeing little relief, it is little surprise that global appetite for US goods is quickly dwindling.
- The healthier US Q3 trade deficit saw a boost from energy exports as commodity prices increased and countries looked for alternatives to Russian supply. This largely drove the strong Q3 GDP print of +2.6% Q/Q annualised, which saw a 2.77pp boost on the back of net trade (of which exports made up 1.63pp, the highest since Q4 2021, with imports making up the remaining 1.14pp).
- Going forward, the contraction of the ISM index implies exports will have less of a positive impact on overall activity.
Source: MNI / ISM / Bloomberg
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