Two the Point — Uncovering Strength in a Shifting Market

Despite recent manufacturing contractions and market volatility, positive employment signals and global manufacturing expansion suggest underlying economic strength and potential for continued growth in the current bull market.

  • U.S. Manufacturing Contraction: The ISM Manufacturing PMI fell to 48.7 in May, marking the second consecutive month of contraction, falling short of the 49.8 forecast, and spurring recession concerns.
  • Positive Employment Signal: Despite overall contraction, the ISM employment index rose to 51.1, showing growth for the first time in eight months and indicating underlying strength in the manufacturing sector.
  • S&P Global U.S. PMI: Contrasting the ISM data, the S&P Global U.S. Manufacturing PMI showed expansion in May, with the employment index reaching its highest level since July 2023.
  • Global Manufacturing Expansion: The Global Manufacturing PMI recorded 50.9 in April, showing four months of consecutive growth and the fastest rate since July 2022.
  • Broad-based Output Growth: Global manufacturing output growth accelerated, led by robust performance in Asia, particularly in India, South Korea, and Taiwan, along with significant gains in the U.S. and U.K.
  • Inventory Rebuilding: Companies are replenishing inventories, driving new orders for goods at the fastest rate in 26 months, and reviving global goods trade, which has seen rising exports for two consecutive months.
  • Bull Market Prospects: Despite recent volatility, the current bull market, which began in October 2022, has delivered a 53% gain over 20 months. Historical patterns suggest the potential for further growth, with median bull markets lasting about 30 months and achieving 90% gains on average over the past 100 years.

 

More from TWO THE POINT

  • Two the Point — U.S. Economy: No Stag, No Flation
    In our weekly video series, we highlight one observation we think is most important regarding the economy and the financial markets. This week we delve into the latest economic data, emphasizing the absence of stagflation and the implications for the investment landscape.
  • Two the Point — Uncovering Strength in a Shifting Market
    In our weekly video series, we highlight one observation we think is most important regarding the economy and the financial markets. This week we discuss positive employment signals and global manufacturing expansion.
  • Two the Point — Earnings Season Wrap-Up & Outlook
    In our weekly video series, we highlight one observation we think is most important regarding the economy and the financial markets. This week we examine earnings season wrap-up and outlook.
WSFS Bank is committed to digital accessibility.