US: Manufacturing rebounds but weaker activity expected through the rest of the year - ING

Manufacturing output in the United States bounced more than expected in August, but the combination of weaker global growth, a strong Dollar and trade tensions are huge headwinds that will result in weaker activity through over the next months, explained James Knightley, Chief International Economist at ING. 

Key Quotes: 

After a pretty tough period, US manufacturing posted a stronger-than-expected 0.5% month-on month gain in August. The details show broad improvements, led by machinery and fabricated metals, but auto output fell 1%.”

“It is a rare piece of good news for the manufacturing sector, but today’s report does not mark a turnaround. Output is still down 1.1% from December 2018 and is 4.4% lower than the peak seen in December 2007.”

“With the latest Chinese and European numbers underlining the weakness in the global economy and the stronger dollar hurting the US’ international competitiveness we expect to see further export weakness over the coming months.”

“The Federal Reserve’s mid-cycle easing will continue tomorrow with additional interest rate cuts likely in December and 1Q20.”