Summary:
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ISM manufacturing PMI: 54.2 vs 55.6 exp
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Final manufacturing PMI falls to 18-month low
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US dollar dips back but remains mixed for the week
The final data point of note for the week has flashed something of a warning sign on the US economy, with 2 manufacturing gauges both coming in below forecasts. The ISM manufacturing PMI, which is the more widely viewed of the two, fell to 54.2 for February, down from 56.6 previously. This also reflects negatively compared to the consensus forecast of 55.8. The three main components of this release also did little to support the US dollar as they all declined, with employment coming in at 52.3 (55.5 prior), new orders 55.5 (58.2 prior) and prices paid 49.4 (49.6 prior).
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ISM manufacturing PMI fell back last month, and the gauge is not far from its lowest in several years. Source: Bloomberg
The ISM release came just 15 minutes after the US final markit manufacturing PMI for February which slid to its lowest level in 18 months. The print of 53.0 was below the consensus forecast and prior reading (both 53.7) and provides further evidence of a slowdown in this sector. With the Chinese PMI joining the Eurozone and Japan in contraction territory below 50 earlier this week it’s readily apparent that global manufacturing activity is clearly slowing down.
The Markit PMI reading for the US was even worse and fell to its lowest level in 18 months to 53.0. Source: Bloomberg
In terms of market reaction, there was some weakness in the US dollar initially but almost an hour after the ISM number, the buck has recovered a little. On the whole for the week it’s been a bit of a mixed bag for USD, with some sizable gains seen against EM currencies and JPY, but comparable declines against the GBP, PLN and SEK. The EURUSD has made steady progress on the week and is higher by 0.5% at the time of writing.
There’s been some decent moves in USD pairs this week, but on the whole the buck hasn’t really moved too much with a fairly even spread of currencies gaining and losing against the greenback. Source: xStation
