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The US ISM manufacturing PMI disappointed with a drop to 56.6 points,  significantly below the 58.6 points expected by the markets. The employment component,  relevant for the Friday’s NFP, was also below last month’s number.

While the dollar remains strong,  the weak PMI joins mostly negative US releases this week and opens the door for a correction.

Also Markit’s manufacturing PMI for the US came out weaker than expected 57.5 in the final call, lower than 57.9 originally reported for September. ADP, was OK: 213K, within expectations, but we’ve already seen how it overshot the real job growth numbers last month.

Consumer confidence was gradually rising only to fall in  September to 86 points, and also house prices are sliding. Not all is bad in the US economy: otherwise expectations for a rate hike and the dollar wouldn’t have risen so nicely.

The big question is: are we now seeing the necessary moderation in growth after a strong second quarter? Is this just part of the general see-saw: a bad  first quarter,  followed by a  rebound in Q2 and now by some mediocre growth in Q3?

Or is it more than a moderation but rather a significant slowdown, in which the United States just cannot decouple from the majority of the world?

A lot depends now on the Non-Farm Payrolls on Friday. After the disappointing NFP in  August, many expect to see a rebound in September and/or an upwards revision for August.

This ISM figure makes it harder to believe. On the other hand, lower expectations  can lead to a strong positive impact as a “relief rally”, if numbers just come out right.

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