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06/11/2015

May Economic Indicators Report Shows Weakened Second Quarter

Cleveland Research reports that the March weakness carried forward into April despite a modestly easier comparison. This is consistent with their base case expectation, which was for a full quarter of March type weakness. However, order deterioration, weaker manufacturer activity, another reduction to the full year outlook and increasingly difficult comparisons all suggest the magnitude of the declines will increase as we progress through the remainder of the quarter.

Highlights of this report include:

  • The April FPDA Index produced a reading of 46, down from 58.2 in March while the broader ISM was 51.5, in-line with the reading last month.
  • The 2015 outlook was cut another 100-200bp in April after a 200bp cut last month, with sales now forecast up 2% for the full year and down from 3-4% previously.
  • Sales in our April fluid power survey declined 1%, similar to March (adjusted for selling days – down 1-2%), weighed down by O/G declines and broadening industrial weakness.
  • Total orders declined for the first time since Aug. 13 falling 3% vs 3% growth in March. The order weakness coupled with increasingly difficult comparisons suggests topline growth is likely to weaken further as we move through the quarter.

See the full report here.  

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