We ´re back to disappointments in US figures: the ISM Non-Manufacturing PMI dropped to 55.3 points, worse than expected. The silver lining comes from the employment, which actually rises from 55 to 55.7 points. Factory orders are down 0.2% as expected.
The US dollar is sliding, with EUR/USD extending its recovery. Update: this doesn’t last too long.
Another important component is new orders, which shows a rise from 57.5 to 58.2 points. The downside comes from prices and imports. The details seem to be better than the headline.
The US Non-Manufacturing PMI (services sector gauge) was expected to rise from 55.9 to 56 points, continuing to reflect solid growth in the largest sector.
The US dollar was off the highs towards the release.
Earlier this week, the manufacturing PMI came out below expectations and more importantly, deeper in contraction zone. Also the employment component fell to the area under 50 points. While manufacturing is a small sector, it is still of importance.
Earlier today, the ADP Non-Farm Payrolls surprised with a jump of 257K jobs in December. The dollar initially rallied but the gain was later dismissed as a seasonal jump rather than a jump to an accelerated pace of hiring. Markit’s final services PMI was revised to 54.3 points. ISM carries more weight in the US purchasing managers’ indices.
While the first week of the month is all about the buildup to the jobs report, 2016 began with a series of geopolitical issues: the detonation of an H-bomb by North Korea was the latest scare, after the Saudi-Iranian crisis and of course the worries about China.
More: Don’t Sell The Euro Yet – BofA Merrill
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