US DATA
August factory orders data confirmed ongoing weakness in the US manufacturing sector, as widely flagged by contractionary survey data (ISM Manufacturing, MNI Chicago PMI). Headline factory orders contracted by 0.2% M/M (vs expectations of 0.1% growth; +4.9% prior rev down 0.1pp), with ex-transportation orders likewise unexpectedly contracting (by 0.1%, vs +0.2% expected and +0.3% prior rev down 0.1pp).
- A pullback was largely to be expected after such a strong July, which in turn was due to outsized aircraft orders (ex-transport factory orders merely moderated by comparison). But this was the 3rd contraction for factory orders in the past 4 months, with the 3M/3M annualized rate remaining in contractionary territory at -1.7%. Overall factory orders are only modestly little higher than they were this time a year earlier on a seasonally-adjusted basis.
- The Durable/Capital goods portion of the report largely confirmed the preliminary prints in the final reading (though core capital goods orders were nudged up 0.1pp to +0.3% M/M) - they too are largely flatlining overall.
- In short, nothing in today's data suggests that a re-acceleration in manufacturing activity is underway. The strong ISM Services reading that came out alongside served as a reminder that it's non-manufacturing sectors - particularly services consumption/production - that have been underpinning growth for most of this year.
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