Bifurcation in the US economy
Trying to make sense of the big discrepancy between the Markit and NAPM manufacturing surveys
Do we have a bout of weakness in the US economy? My guess is that we have a highly bifurcated development.
Capgoods orders don’t look particularly strong by sector. The only big gainer is materials handling equipment which is a tiny portion of the total. Construction equipment and oil and gas machinery reflect the energy sector which looks very weak (in keeping with low rig count and expected Capex by energy companies).
The energy sector has stalled out.
There’s a clear downtrend in YOY employment growth since Jan 2015, from a peak of 2.3% YOY to 1.5% YOY. There has been a pickup in manufacturing employment YOY growth — not quite sure where that’s coming from although the recent improvement (+36,000 on the August payrolls) well might be driven by the cheaper dollar. It’s just a 1% YOY gain, so perhaps not decisive for the overall economy.
There is definitely some export improvement, though. Last week I circulated charts derived from the Netherlands CPB showing US export growth catching up with ROW:
The seasonally adjusted export data for the US through June give the same impression.