Barry Gilbert

The US economy mostly runs on the back of household consumption, and so the manufacturing sector is usually bit of an afterthought. Though its salience has increased recently amid the 2024 presidential election campaign, and especially former President’s Trump’s preference for a weaker dollar to boost the export sector. Still, the headline news from the manufacturing sector has been pessimistic, thanks to poor survey data.

Job growth continues to catch most people by surprise, rising 272,000 in May. That was well above expectations for a 180,000 gain. In fact, “whisper” expectations (as much as one can glean from online chatter amongst economists and strategies) seemed to be tilted to a downside surprise, perhaps close to 150,000.

The big picture, coming out of the Federal Open Market Committee (FOMC) meeting is that inflation has eased considerably since last year, but it remains elevated. As a result, they’re choosing to maintain policy rates where they are (in the 5.25-5.50% range). At the same time, Federal Reserve Chair Jerome Powell believes the disinflation process will continue and so the next major move they make will likely be to cut rates.