The ISM Manufacturing PMI was expected to recover back from 49 points to 50.6 points this time – a recovery from contraction to growth. Indeed, it even beat these expectations and rose to 50.9 points. This is good news. However, the unemployment front is quite worrying: the employment sub-component dropped below 50. It fell from 50.1 to 48.7 points – in contraction territory for the first time since September 2009.
EUR/USD was trading at around 1.3050 before the publication and USD/JPY stood on around 99.70. The mixed news moved currencies in a choppy manner but without a clear direction. Update: EUR/USD is now heading a bit lower.
The manufacturing sector is the first to receive the PMI numbers. The more important figure is from the services sector, which is the vast majority of the US economy. Prices rose to 52.5 points, above expectations for a rise from 49.5 to 50.5. New orders also rose back to growth territory: from 48.8 to 51.9 points. This is a forward looking sub-component.
Construction spending, published at the same time, was predicted to have risen by 0.6% after rising 0.4% in the previous month. They rose by 0.5%. This is a minor indicator.
Earlier, Markit published its final purchasing managers’ index for the month of June. It was revised to the downside, from 52.2 to 51.9 points, contrary to expectations for an upwards revision.
Further reading: 5 Most Predictable Currency Pairs – Q3 2013
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