Solid Cyber Monday & Markit Manufacturing Data

Strong Cyber Monday

Redbook same store sales growth was 7.9% in the week of November 30th which was up from 4.3% and the highest reading since early January. You’d think that growth spike was because of Black Friday being a week later, but last week had 4.3% growth, meaning there wasn’t a decline in growth because of a tough comp. That was the 2nd lowest reading in the past 5 weeks, but not out of the ordinary. It was actually up from the previous report which had 4.1% growth. 

Both reports had similar comps, so I think it’s safe to say this was a strong Black Friday. In 2018, yearly growth in the weeks of November 18th, November 25th, and December 2nd were 6.2%, 7.9%, and 7%. I’m not sure which weeks are the comp for this report, but either way it was a strong reading. It had a very strong 2 year growth stack.

This is consistent with the data reported by Adobe Analytics. The chart below shows the runup in online sales in 2019 compared to 2018. Keep in mind, that chart’s scale is from $0 to $10 billion not $1,000 billion. The dot is small. This is daily sales. 

Cyber Monday online sales were $9.2 billion which slightly missed Adobe’s initial estimate of $9.4 billion. Yearly growth was 16.9%. For context, the cycle peak for non-store retail sales growth was this August at 15.6%. That means this was very high growth.

In the November retail sales report, we should see solid overall growth because of the strong non-store growth on Black Friday and Small Business Saturday (Cyber Monday was in December). There’s a chance the seasonal adjustment doesn’t account for the timing of Cyber Monday which would hurt growth. That’s something to watch out for.

Motor vehicle sales increased my expectations for the November retail sales report as sales rose from 16.5 million to 17.1 million which beat estimates for 17 million. Domestic sales increased from 12.7 million to 13.3 million. Motor vehicle and parts is the largest category of retail sales. Total online sales from November 1st to December 1st were $72.1 billion. They are expected to be $143.7 billion this holiday season.

Relatively Solid Manufacturing PMI

November Markit manufacturing PMI gave the market what it wanted, but traders ignored it like they always do. This report is a signal the manufacturing sector is bottoming. I expect the ISM PMI to average above 50 in Q1. Markit manufacturing PMI hasn’t fallen below 50 in this slowdown.

As you can see from the chart below, historically the Markit PMI is below the ISM PMI, but in the past few months it has been above the ISM PMI. Current positive difference between the Markit PMI and the ISM PMI is the highest ever. 

Since the average of the regional Fed indexes is also more positive than the ISM report, I think the PMI should be in the low 50s. ISM report caused stocks to fall on Monday and the Atlanta Fed Nowcast to drop. Those moves should be rescinded. If stocks dropped significantly, I’d be bullish in the short term. But one weak ISM report wasn’t enough to make stocks oversold.

Markit report includes small, medium, and large firms, while the ISM report only includes large firms. That means U.S. centered small and medium sized firms are outperforming large multinational firms. And Markit report also has a higher correlation with manufacturing production than the ISM PMI. 

The Markit PMI’s 1 year growth correlation with manufacturing output is 0.84, while it is 0.72 for the ISM reading. Based on the size and depth of the Markit survey, those results are to be expected.

Specifically, the Markit PMI hit a 7 month high as it went up from 51.3 to 52.6. Output and new order growth indexes both hit a 10 month high. This final PMI was above the flash reading of 52.2 which means it was 53 in the 2nd half of the month. That’s quite an improvement over the 1st half. 

However, I wouldn’t read too much into 2 weeks of data. This was a good report as the index has been up 3 straight months. However, it still has plenty of room to increase further. The comment section of the report stated, “Some caution is needed, as these improved survey numbers merely translate into very subdued growth in comparable official gauges of manufacturing production and factory payrolls.”

U.S. & China Push Up Global PMI

JP Morgan Markit global manufacturing PMI rose from 49.8 to 50.3 which is a 7 month high. This was the first reading above 50 since April. If this was an ISM report, it would have fallen. America has the highest weighting in this index. It had the 5th best reading. 

China had the 6th best reading and has the 2nd largest weighting in this report. Its PMI of 51.7 was a 0.1 increase and the best reading since December 2016. It’s interesting to see America and China outperforming even though the trade negotiations have gone south.

Consumer goods PMI hit a 4 month high. Intermediate and investment goods sectors both had readings below 50. The output index increased from 50.3 to 50.9 and new orders increased from 50 to 50.4, but the future output index fell from 57.5 to 57.2. 

A decline in the future output index slightly goes against the theory that the manufacturing sector is bottoming. There are actually more countries with PMIs below 50 than above 50 because they are the smaller ones. Germany had the 2nd lowest reading. 19 countries saw declines and 11 saw increases in manufacturing.


Cyber Monday was strong. With the solid Black Friday and the Small Business Saturday, online sales growth should drive overall retail sales growth. That’s assuming the timing of Cyber Monday doesn’t suppress growth. Strong motor vehicle sales also will help the November report. 

Markit manufacturing PMI showed improvement, signaling the ISM PMI was too low. America and China pushed the global manufacturing PMI higher. 

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