QI TAKEAWAY — Enjoy the relief rally while it lasts. Regional data suggest extended periods of weakness for new orders, backlogs, and factory hours — all of which flag downside risks for top-line revenue, employment, and pricing, a recipe for an extended industrial recession.
- The Dallas Fed’s March manufacturing headline came in at -15.7 vs. the -10 Bloomberg estimate, an 11th straight sub-zero print; despite the market’s relief rally, Challenger job cuts due to economic conditions were on the rise even before Silverlake fell earlier this month
- As z-scores, Future New Orders from the Dallas and KC Fed, at -2.07 and -1.61 in March, respectively, have been weak for six straight months, rivaling their GFC trends; Dallas Fed Future Backlogs have also been in the red since June, rivaling their GFC weakness as well
- March saw a joint contraction in the Dallas and KC Fed Future Workweeks, a pattern seen only in the GFC, the 2019 trade war, and the 2015-16 industrial recession; unsurprisingly, the top concern for execs in the Dallas Fed’s survey, at 55.6%, was weakening demand