*As seen In Risk In The Week report 02/24/23, cablefxm.co.uk/reports
The January gauge of U.S. manufacturing sector fell to 47.4 from a prior 48.4, this was worse than the median survey of 48.0 and marked a third consecutive month of below 50.0 prints. The one point drop in the survey was mostly due to declines in new orders and inventories, the former fell to 42.5 from a prior 45.1. Inventories remained above the expansion threshold at 50.2, however, this is a decline from the prior 52.3. The 6-month average on the index is now at 49.8 after the January release, and now 8/10 sectors read below the 50.0 level. There has been a clear divergence between the manufacturing and services indexes, as the latter came in at 55.2, up from a prior 49.2 and the consensus of 50.5. The January services index posted the biggest monthly gain since June 2020. Not only the report showed the lack of evidence of a local economic slowdown, but foreign demand rising as China reopened its economy after imposing its Covid-19 policy. Wells Fargo analysts see another month of manufacturing PMI in contraction territory, and say they will focus on any signs of disinflationary pressures and challenges to the labour market. For the services index, Wells Fargo sees a slight deterioration but expect the figure to remain in expansion or above 50.0.
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