Manufacturing PMI Climbed Back Above 50 In January

Key Insights

• Manufacturing PMI increased from 47.9 in December to 50.3 in January. 
• Services PMI grew from 51.4 to 52.9.
• Composite PMI improved from 50.9 to 52.3.

On January 24, 2024, S&P Global released flash readings of PMI reports for January.

Manufacturing PMI improved from 47.9 in December to 50.3 in January, compared to analyst consensus of 47.9. Numbers above 50 show expansion. At the same time, the report indicated that the improvement in operating conditions came amid a further drop in production.

Services PMI increased from 51.4 in December to 52.9 in January, while analysts expected that it would decline to 51. Composite PMI grew from 50.9 to 52.3, easily beating analyst estimates.

S&P Global commented: “An encouraging start to the year is indicated for the U.S. economy by the flash PMI data, with companies reporting a marked acceleration of growth alongside a sharp cooling of inflation pressures.”

Treasury yields moved higher after the release of the reports. The U.S. economy remains in a good shape, so Fed has the opportunity to keep rates at high levels to put additional pressure on inflation.

U.S. Dollar Index moved back above the 103.00 level as traders reacted to PMI data. Rising Treasury yields provided material support to the American currency.

Gold pulled back below the $2025 level. The strong economic data from the U.S. is bearish for gold markets.

SP500 moved away from session highs after the release of PMI reports. Fed policy outlook is among the key catalysts for SP500. However, it remains to be seen whether SP500 will gain downside momentum as traders may focus on the strength of the U.S. economy and ignore rising Treasury yields.

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