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A small positive surprise for the US economy in April: manufacturing grew at a stronger pace than expected: 54.9 points according to ISM Manufacturing PMI.  The purchasing managers’ index for April was expected to tick up from 53.7 to 54.3 points, reflecting stronger growth in this sector. This is the last hint for the Non-Farm Payrolls report tomorrow. The employment component jumped from 51.1 to 54.7 points, and this raises expectations for the NFP.

Before the release, EUR/USD traded around 1.3870, GBP/USD around 1.69 and USD/JPY around 102.30.  The small positive surprise does not translate into big market movements.

The comments accompanying the release are very positive: Holcomb mentions the fact that inventories at customers are very low, that the strength is broad based and that backlogs are still high.

The new orders component remained unchanged at 55.1 points. Prices dropped from 59 to 56.5. Construction spending, a separate release is up 0.2%, lower than 0.5% expected.

Markit’s final manufacturing PMI for April was revised from 55.5 points initially reported to 55.4 now, lower than an upwards revision to 55.8 points expected.

Earlier, jobless claims disappointed with a rise to 344K while other indicators such as personal spending, personal income and Core PCE came out above expectations.

Manufacturing is the smaller sector in the US economy, with services playing a much bigger role. However, this time we have an early release of the NFP and the ISM Non-Manufacturing PMI will be released only afterwards, leaving a bit more uncertainty and hopefully more volatility around the NFP publication.

See how to trade the Non-Farm Payrolls with EUR/USD.