Today's US ISM Manufacturing PMI
There’s one key data release due out today and that’s the US ISM Manufacturing PMI, or Purchasing Managers’ Index. This is a leading indicator of the US’s economic health. That’s to say that it is forward-looking in a way that many data releases aren’t. For example, Non-Farm Payroll data always relates to what has already taken place in the US jobs market. But the Manufacturing PMI is a survey of business purchasing managers. These people have to react quickly to market conditions on behalf of the companies they work for. So, they give the most up-to-date and relevant insight into the corporate view of the economy.
Behind the scenes, we’ve been analysing the data we’ve collected from Smart News. We’ve noticed a significant drop in mentions of the ISM Manufacturing PMI on social media since February. To give this some context, the big spike in September last year corresponded to the survey dropping below 50 for the first time in three years. This is significant for three reasons. Firstly, a number below 50 indicates contraction in the US manufacturing sector. Secondly, this contraction happened well before the coronavirus pandemic got going. Thirdly, the PMI data remained below 50 for the rest of that year. So, we had a leading US economic indicator showing weakness in the manufacturing sector, completely independent from any coronavirus effects.
You can see the spikes in social media interest (in blue) around the time of each release.
Putting it all together
Last month, the PMI slumped to 41.5 – its lowest reading since May 2009 as we were recovering from the Great Financial Crisis. Yet social media mentions were little more than a blip. What does this tell us? Well, it’s difficult to know for certain. But one interpretation could be that commentators have lost interest in the data as the US comes out of lockdown. They may also believe that the worst is over, both in terms of the slump in manufacturing and the coronavirus. That ties into the ongoing stock market strength. But could that be a mistake? The general consensus is that today’s number will be a few points higher than last month’s. But let’s not forget that the US manufacturing sector was contracting right through the fourth quarter of 2019. It may prove too early to sound the ‘all clear’ and maybe we’ll see social media interest in this data point pick up in the months to come.
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