The following from Econoday's commentary on yesterday's release of the November Manufacturing Purchasing Manager's Index (along with other data points) speaks to why we presently remain relatively growthy in our sector weightings (green highlights), and yet to the concerns we've been expressing herein and why we may find ourselves shifting to a somewhat more defensive posture in the months to come (yellow highlights):
"The manufacturing PMI final for November eased to a still solid 55.3 supported by accelerating growth for new orders to a 6-month high, a rise in export orders to a 9-month high and employment which came in at the second highest rate so far this year. Capacity constraints are evident in rising backlogs and slowing vendor performance. Cost pressures for raw materials including metals, the latter tied in part to tariffs, intensified in November with pass through to customers reported.
There are soft spots in today's report including moderation in production and a dip back in business confidence to the least optimistic level since September last year. Yet the gains in orders and employment are solid signals for a factory sector that has been at the top of the 2018 economy. "