Thanks to rather positive PMI data, the Dow Jones broke their second 28k point mark in September, only for the third time since the community pandemic fully empowered.
The 28K has been like the Blueseas benchmark since the Dow first hit last November, but its ability to maintain this level (during the August-September transition) is questionable.
The Dow Jones, who has already surrendered half of their 1% opening gain, is currently sitting at a 0.42% rally with 27,897 points.
This follows largely positive PMI data, with production in September showing what IHS Markit (NYSE: INFO) called “the most rapid improvement in operating conditions across the US.
“The manufacturing sector has started from early 2019.”
Overall, the IHS said growth was supported by a rapid increase in production output at the end of the third quarter, with the most rapid growth rate for the 10-month period. The positive outcome of this was upward pressure on capacity, forcing manufacturers to expand their labor force, leading to the second sharpest increase in employment since November 2019.
IHS Markit Graphics and US PMI Data
According to an IHS survey, US manufacturing PMI was 53.2 in September, up slightly from 53.1 in August, but fell in previous flash readings of 53.5.
Speaking about some of the risk factors facing US manufacturers, IHS Chief Business Economist Chris Williamson said:
“But that wasn’t all good news. The supply shortages have gotten worse as companies are increasingly struggling to source enough inputs to meet their production requirements. In many cases, demand often exceeds supply, so prices rise sharply with many types of inputs, especially metals.”
“The growth of new consumer goods orders also declined that month, suggesting cooling demand from households, and generally criticising Covid-19. As a result, the overall order book inflow slowed compared to August.”
“The outlook has also been bleak as businesses are more concerned about sustained economic disruption from the pandemic, along with the uncertainty caused by the upcoming presidential elections. Therefore, the sector appears to enter the fourth quarter on a slow growth trajectory, indicating that fourth quarter GDP growth will decline considerably from the third quarter rebound.”
We look forward to the future of Dow Jones, and many things will be determined by the results of the US presidential election, as well as business trust indicators in PMI data. But for now, neither the Dow nor the trust in the business has benefited from the uncertainty and political hostility we currently see on the pond.
