ISM Manufacturing PMI Missed Analyst Expectations

Key Insights

• ISM Manufacturing PMI remained unchanged in November. 
• New Orders Index improved from 45.5 in October to 48.3 in November. 
• U.S. Dollar Index moved away from session highs as traders reacted to the weaker-than-expected report.

On December 1, the Institute for Supply Management released ISM Manufacturing PMI report for November. The report indicated that ISM Manufacturing PMI remained unchanged at 46.7, compared to analyst consensus of 47.6. Numbers below 50 show contraction.

The report showed that economic activity in the manufacturing sector contracted for the 13th consecutive month.

New Orders Index increased from 45.5 in October to 48.3 in November, while Production Index declined from 50.4 to 48.5.

The Institute for Supply Management commented: “The U.S. manufacturing sector continued to contract at the same rate in November as compared to October […] Demand remains soft, and production execution is slightly down compared to October as panelists’ companies continue to manage outputs, material inputs and – more aggressively – labor costs.”

Treasury yields moved lower after the release of ISM Manufacturing PMI report. Bond traders bet that the weakness of the manufacturing sector will force Fed to cut rates in the first half of the next year.

U.S. Dollar Index moved away from session highs as traders focused on the pullback in Treasury yields. Currently, U.S. Dollar Index is trying to settle below the 103.50 level.

Gold moved back towards the $2050 level, supported by falling Treasury yields. The market sentiment in the gold markets remains bullish.

SP500 rebounded towards the 4575 level after the release of the report. Fed policy remains the key catalyst for stocks, so a weaker-than-expected report may provide additional support to equity markets.

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