Some Uncertainty In The January ISM

I closed an earlier post with:

"I have to say that the US ISM data (albeit barely back in expansion mode) is an unambiguous positive!"

While, indeed, moving back above 50 is positive, on further inspection (the ISM site was down earlier today), the internals in the closely-watched Institute For Supply Management January Manufacturing Survey do suggest some ambiguity among the survey respondents.

The report's featured respondent comments highlight (via yellow and red below) some ongoing concerns:  emphasis mine...

“Business has picked up considerably. Many of our suppliers are working at or above full capacity. Tariffs are still a concern and are believed to be a factor in short supply and higher prices of electronic parts. Our profit margin has been somewhat negatively affected by high tariffs, particularly on electronic parts from China.” (Computer & Electronic Products)

“Small signs of increased global demand in the chemical segment.” (Chemical Products)

“Continued signs of slowdown in manufacturing.” (Transportation Equipment)

“Demand for prepared frozen food continues to be strong, but margins compressing as inputs rise with price elasticity preventing accompanying increases.” (Food, Beverage & Tobacco Products)

“Our customer slowdown has not reached the bottom.” (Petroleum & Coal Products)

“Our business is starting 2020 stronger than we finished 2019, as we saw a dramatic downturn in orders over the last four months of 2019. Orders are up to start the year, but slightly behind where they were one year ago.” (Fabricated Metal Products)

“Business is good — above last year, though a little below plan.” (Furniture & Related Products)

“The annual holiday slowdown was slightly more significant compared to the previous three years, heightening concerns over the 2020 first-quarter forecast.” (Electrical Equipment, Appliances & Components)

“The lack of faith in the economy seems to be why we cannot sell capital projects.” (Machinery)

“Tariffs on injection molds will impact selection of mold builder for future jobs. We are more likely to choose domestic rather than offshore.” (Plastics & Rubber Products)

Punctuating our concerns regarding the consumer, the ISM Employment Index remains troubling.

While not every dip has presaged a decline in the overall jobs number historically, it's definitely something to keep very close tabs on: 

Red shaded areas denote recessions, click to enlarge...