More disappointing data: the ISM Manufacturing PMI dropped to 48.2 points in December, deeper in contraction territory. The employment component, important for the NFP on Friday, dropped from 51.3 to 48.1 points, from growth to contraction. Also construction spending, a separate report, missed with a drop of 0.4% instead of +0.6% predicted.
The US dollar doesn’t seem excited by the disappointing data and continues remains strong.
The services sector is much bigger than the manufacturing one, as with most developed economies, but contraction even in a small sector and the one that actually produces stuff, is certainly not a positive development.
The US ISM Manufacturing PMI was expected to tick up from 48.6 to 59 points in December, still in contraction territory. The manufacturing sector has been the weaker link for a long time.
Financial markets opened the year in a sour mood, with falls in stock markets and a “risk off” mood in currencies. We are now seeing a stronger dollar. EUR/USD traded around 1.0835 and USD/JPY at 119.10 before the release.
Earlier, Markit’s final manufacturing PMI was revised from 51.3 to 51.2 points for December.
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