The US Manufacturing PMI Reached Its High for More than Two Years

August 2, 2013

The US dollar showed a significant growth on Thursday, the highest for more than a month according to the dollar index after the release of non-farm payrolls and manufacturing PMI statistics data which turned out much better than expected. All this happened before Friday release of the US non-farm payrolls report which might turn out better than forecasted after the ADP report.

Unemployment claims dropped to 5-year low by 19 thousand at once to 326 thousand last week while a growth to 345 thousand was forecasted. An average indicator’s reading for 4 weeks, which smooths out short-term fluctuations, also fell by 4.5 thousand to 341.25 thousand.

The ISM manufacturing PMI in the USA rocketed in July to its high of 55.4 since June, 2011against 50.9 in May with the forecast of 52. The reading higher than 50 indicates expansion of industrial activity. Production, new orders and employment sub-indices rose significantly while inventories and prices dropped.

The euro was traded downwards on Thursday amid the ECB meeting which resulted, as expected, in the central bank keeping the interest rates unchanged. The ECB president Mario Draghi announced during the press conference that the balance of risks for the economic growth outlook was still shifted to the negative side, that inflation expectations in the euro-zone remained moderate; and he also repeated that interest rates were likely to be near record lows within a long period of time.

Meanwhile, the euro-zone manufacturing PMI in July grew for the first time in two years: the final PMI exceeded the threshold of 50 p. and reached 50.3 p. while the preliminary reading of 50.1 p. was forecasted to maintain unchanged. Production growth in Germany was the fastest in 1.5 years and Italian manufactures said about activity growth for the first time in two years.  

The pound lost all its growth which was observed after the release of manufacturing PMI that reached 28-month high 54.6 points from the revised upwards reading of 52.9 in June. Production and new orders growth in the UK was the highest from February, 2011. As it was expected, according to the results of the meeting the Bank of England left both the interest rate and the Asset Purchase Facility volume unchanged. However, unlike the previous month, no rate statement was published.

The yen decreased considerably amid Japanese stock market growth after the release of more positive Chinese manufacturing data than expected. The official report showed that Chinese manufacturing PMI had risen to 50.3 by the end of July compared with 50.1 in June. Meanwhile, the same HSBC index mismatched the official one – it dropped to 47.7 from June reading of 48.2.

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