Latest / Markets with Megan: A Quick Financial Markets Update / Unpacking the ISM Manufacturing Data and What It Means for Investors | Episode 107 | 03-01-2024

Transcript

Unpacking the ISM Manufacturing Data and What It Means for Investors | Episode 107 | 03-01-2024 · Markets with Megan: A Quick Financial Markets Update

• 0:01
  Megan Horneman: Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:05
  Megan Horneman: We're coming to you today, Friday, March 1st, with our regular segment of Markets.
• 0:10
  Megan Horneman: With Megan, we're going to talk about some of the economic data that we received this morning.
• 0:14
  Megan Horneman: We got a lot of information on the consumer.
• 0:17
  Megan Horneman: The biggest report that we got today was on the ISM Manufacturing Report.
• 0:21
  Megan Horneman: It comes out the first day of every month and this measures the health of our manufacturing sector.
• 0:29
  Megan Horneman: The ISM Manufacturing Index is typically a recession indicator as well.
• 0:33
  Megan Horneman: When this index falls below 50, that means that the manufacturing sector is contracting.
• 0:38
  Megan Horneman: This index unfortunately came in lower than expected and it's been contracting now in contraction territory for 16 consecutive months.
• 0:47
  Megan Horneman: This is the longest consecutive streak that we've seen this index in contraction territory since 2001.
• 0:54
  Megan Horneman: Let's dig into some of these details.
• 0:56
  Megan Horneman: The majority of the categories are also in contraction territory, but the biggest declines were in new orders.
• 1:03
  Megan Horneman: This is a negative from an economic standpoint.
• 1:06
  Megan Horneman: It was the biggest percentage drop we've seen since September of 2022.
• 1:11
  Megan Horneman: The employment component this is also a negative for the labor market, specifically in the manufacturing sector.
• 1:18
  Megan Horneman: That is at the lowest level.
• 1:20
  Megan Horneman: It's hovering near the pandemic levels that we saw, so very weak from an employment standpoint.
• 1:27
  Megan Horneman: One area of this that is still elevated and above the level between contraction and expansion is the prices paid, and that's inflationary.
• 1:38
  Megan Horneman: This is something that's concerning to us.
• 1:41
  Megan Horneman: It's something that should concern the Federal Reserve, because the economy is slowing.
• 1:44
  Megan Horneman: The data we've seen is that it's slowing pretty rapidly, but all of these inflation indicators are still stuck.
• 1:50
  Megan Horneman: We've had a lot of progression here in inflation, but we're showing some signs of stalling here.
• 1:57
  Megan Horneman: Where we are.
• 1:58
  Megan Horneman: When you look at that component that now has been above 50, so in expansion in territory or rising, for the past two consecutive months, and that's after we saw it contracting for eight consecutive months.
• 2:11
  Megan Horneman: Inflation is going the wrong way from a manufacturing standpoint.
• 2:16
  Megan Horneman: We'll continue to be back next week with some more economic data.
• 2:20
  Megan Horneman: If you have any questions or comments, please feel free to reach out to podcast at Verdence dot com.
• 2:24
  Megan Horneman: Thank you.