US: White House Says Federal Govt Layoffs During Shutdown 'Likely In Thousands'
White House Press Secretary Karoline Leavitt told reporters a short time ago that federal government layoffs during the government shutdown are “likely going to be in the thousands.” Leavitt says it is “unfortunately” something the Office of Management and Budget and White House are working on today. Adds that the discussions would not be taking place if Democrats voted in favour of the GOP’s funding measure. Leavitt told reporters yesterday that layoffs will happen in “two days, imminent, very soon.”
- President Trump wrote on Truth Social earlier that he will meet with OMB Director Russell Vought today to “determine which of the many Democrat Agencies... he recommends to be cut, and whether or not those cuts will be temporary or permanent.” No word yet from the White House press pool on the timing of the meeting.
- Trump wrote on Truth Social overnight, “Republicans must use this opportunity of Democrat forced closure to clear out dead wood, waste, and fraud. Billions of Dollars can be saved.”
- House Speaker Mike Johnson (R-LA) told Fox yesterday the shutdown gives Republicans an opening to “do some things that we would not otherwise be able to do, because we would never get Democrat votes for them.” The White House “gets to decide now what services are essential, what programs and policies should be continued,” he added.
- Leavitt reiterated that the administration wants Congress to pass a ‘clean’ Continuing Resolution to keep the government funded before any negotiations can take place on healthcare.
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US DATA: ISM Manufacturing Improves On New Orders, But Tariffs Still Taking Toll
August's ISM Manufacturing report was weaker than expected on the headline figure, with some sub-components telling a slightly more mixed story, and price pressures unexpectedly diminished. Overall the ISM survey continues to portray a manufacturing sector that is failing to convincingly regain traction after the summer's tariff-related policy uncertainty. Indeed, tariffs were mentioned extensively in the sector-by-sector anecdotes in the report, and not in a positive light.
- The headline index ticked up a little less than expected, to 48.7 (49.0 expected, 48.0 prior) for a 6th consecutive sub-50 reading, notably with the improvement in the Employment sub-component disappointing at 43.8 (45.0 expected, 43.4 prior - per ISM, "panelists indicated that managing head counts is still the norm at their companies, as opposed to hiring").
- Additionally, Production took a big step back after 3 consecutive months of solid improvement, dropping to a 3-month low 47.8 (51.4 prior), consistent with negative Industrial Production and dragging on the headline figure.
- Conversely, the brightest note by far was unexpected strength in New Orders, which exceeded 50 for the first time since January (48.0 expected, 47.1 prior), as flagged by a solid performance in regional Fed surveys in this category. That was the biggest upside contributor to the overall ISM headline rise, though the commentary is decidedly less positive than the figure suggests: “Of the six largest manufacturing sectors, two (Food, Beverage & Tobacco Products; and Computer & Electronic Products) reported increased new orders. Despite the index’s move into expansion territory, for every positive comment about new orders, there were 2.5 comments expressing concern about near-term demand, primarily driven by tariff costs and uncertainty."
- Even so, this came as export orders ticked up 1.5 points to 47.6 for a 5-month high, though Imports fell 1.6 points to a 3-month low 46.0, suggesting weak trade dynamics overall.
- Inventories ticked up 0.5 points to reach a 4-month high 49.2, albeit still in contractionary territory. The differential between New Orders and Inventories reached 2 points, the highest since January - potentially indicative of improving future activity.
- Supplier Delivery times slowed (as indicated by the 51.3 reading, up 2 points from July which was the only month this year that indicated quickening delivery times).
- Another key surprise was in Prices Paid which dipped for a 2nd consecutive month, by 1.1 points to 63.7 (65.0 expected, 64.8 prior) - marking a 6-month low albeit still indicative of positive price pressures.
- As the above suggests, this was a very mixed report. The ISM categorizes these subcategories in terms of Demand (2 of 4 indicators improved - New Orders/New Export orders, vs Customers' Inventories and Backlog of Orders contracting at faster rates); Output (Production contracted, but Employment edged up), and Inputs (Supplier Deliveries, Inventories, Prices, Imports) which on net moved further into contraction.
GILT AUCTION PREVIEW: On offer next week
The DMO has announced it will be looking to sell GBP1.75bln of the 4.75% Oct-43 Gilt (ISIN: GB00BPJJKP77) at tis auction next Tuesday, September 9.
