Manufacturing PMI Dips As Production Falls Again

Key Insights

• Manufacturing PMI declined from 49 in July to 47 in August. 
• Services PMI decreased from 52.3 in July to 51 in August.
• Composite PMI fell from 52 in July to 50.4 in August.

On August 23, S&P Global released U.S. PMI reports for August. The reports indicated that Manufacturing PMI declined from 49 in July to 47 in August, compared to analyst consensus of 49.3.  Numbers below 50 show contraction.

Services PMI decreased from 52.3 in July to 51 in August, while analysts expected that it would drop to 52.2. Composite PMI declined from 52 to 50.4.

S&P Global commented: “U.S. firms signalled a slower rise in output during August, as activity teetered near stagnation across the private sector. Manufacturers dipped back into contraction as production fell again, while service providers saw growth slow to the weakest since February.”

Today’s PMI reports were also weaker-than-expected in the EU and UK. Treasury yields fell as traders reacted to the economic data. The reports showed that the economy is already under pressure, so the chances of another rate hike from the Fed are decreasing.

Interestingly, U.S. dollar is mostly flat against a broad basket of currencies despite the strong pullback in Treasury yields. The U.S. Dollar Index settled near the key resistance at 103.65.

Lower yields provided material support to precious metals markets. Gold rebounded above the $1915 level, while silver rallied above $24.00.

Stock traders were also bullish at the start of the trading session. SP500 moved above the 4400 level, while NASDAQ climbed above 15,000.

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