Bill Diviney, the senior economist at ABN AMRO, notes that the U.S. November manufacturing ISM PMI, which was released on Monday, unexpectedly fell back, with the weakness concentrated in the forward-looking new orders index, which was back at the August low of 47.2 and the employment index, which was not far off the recent low at 46.6 (September: 46.3).

• “The data suggests that, in contrast to China, manufacturing has yet to find a bottom in the US, and points to continued weakness in investment and jobs growth. The new orders index is a strong leading indicator for fixed investment in the US, and suggests flat to mildly negative growth over the next two quarters.
• The employment index tracks the manufacturing payrolls, and suggests an additional leg lower in Friday’s November jobs data. Indeed, looking at the slowdown in payrolls growth over the past year – which has fallen from an average 223k per month in 2018 to 156k over the past six months – the bulk of this is explained by the weakness in manufacturing, which went from adding 53k in jobs per month on average in 2018 to just 2.2k per month in the past 6 months (the October reading was negative for the first time since 2016).
• We expect this weakness to ultimately hit consumption, which has thus far been resilient to the industrial sector downturn. As such, our growth forecast for 2020 remains well below consensus at 1.3% (consensus: 1.8%), and we expect this to drive another Fed rate cut in Q1 2020.”