Manufacturing PMI Falls To 47.9, Missing Analyst Expectations

Key Insights

• Manufacturing PMI decreased from 49.4 in November to 47.9 in December. 
• The manufacturing sector remains under pressure as client demand is weak. 
• Supply exceeds demand for many goods. 

On January 2, S&P Global released the final reading of Manufacturing PMI report for December. The report indicated that Manufacturing PMI declined from 49.4 in November to 47.9 in December, compared to analyst consensus of 48.2. Numbers below 50 show contraction.

The report showed that inflationary pressures intensified as cost burdens increased and selling prices rose at the quickest rate since April. According to S&P Global, supply exceeds demand for many goods, which points to downside risks to the manufacturing sector.

S&P Global commented: “Output fell at the fastest rate for six months as the recent order book decline intensified. Manufacturing will therefore act as a drag on the economy in the fourth quarter.”

U.S. Dollar Index settled near 102.05 as traders reacted to the report. Treasury yields are moving higher today, providing material support to the American currency.

Gold continued its attempts to settle above the $2070 level. Gold is moving higher despite stronger dollar and rising Treasury yields. Demand for safe-haven assets increased amid rising tensions in Red Sea, which was bullish for gold markets.

SP500 remains under pressure after the release of the disappointing report. Currently, SP500 settled near the 4740 level. Rising Treasury yields and profit-taking after the recent rally serve as bearish catalysts for SP500.

For a look at all of today’s economic events, check out our economic calendar.