by Keti on October 2, 2019

The Impact of the ISM Manufacturing Report

On Oct. 1, 2019, the Institute for Supply Management (ISM) released data detailing the overall performance of the US’s economy and manufacturing sector. Overall, the data indicates that the US is facing an economic contraction. More specifically, the ISM data indicates that the US’s Purchasing Managers’ Index (PMI) is currently at a 47.8. A PMI below 50 is indicative of a contraction in the manufacturing sector. Additionally, New Export Orders underwent a 2.3% decrease since August. Both of these are indications of a US manufacturing sector decline.

Does the economy still grow?

Moreover, the ISM data shows a decrease in supplier deliveries, inventories, and a backlog of orders. These are further indicators that there is an issue with the current direction of the economy. Nevertheless, the data does show that the economy is still growing, but at a slower rate than before. More importantly, it indicates that there has been a downturn in the manufacturing sector.

According to the expert opinion of FX brokers, potentially as a result of the downturn in the manufacturing field, the US dollar initially decreased in value with respect to its reserve currencies – the Euro and the Yen. As of now, the Euro/Dollar exchange rate has stabilized, but the long term consequences of this financial data are unknown.

Economists are currently split on whether or not this data has a significant bearing on the future state of the US’s economy. Some believe that this, in fact, disheartening financial data that strongly implies an upcoming recession in the US’s economy. Others believe that we have yet to receive enough data to believe that a recession imminent issue.

By Keti

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