PMI reaches new low this year, companies are waiting for more certainty - Comments on US PMI in July

In July 2024, the U.S. Manufacturing PMI declined to 46.7%, down from the previous value of 48.5%. This marks the fourth consecutive month of decline in the Manufacturing PMI, with all major indicators, except for supplier deliveries, showing accelerated contraction.

However, we believe that this month's PMI drop is merely a hiccup in the U.S. recovery process. Looking at the overall trend, both the PMI Manufacturing Composite Index and its subcomponents have already started an upward trajectory.

From the investment perspective, high interest rates have suppressed investment demand, but the Federal Reserve's rate cuts are likely imminent, potentially as soon as September.

Due to uncertainties brought about by political factors and demand, PMI data may exhibit increased volatility in the coming months. However, with the anticipated rate cuts and a rebound in consumption, the U.S. manufacturing sector's vitality is expected to rise, which will boost household incomes and further accelerate consumption growth. Consequently, the demand gap is also expected to recover.