US ISM manufacturing stabilized at a weak level - Danske

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 1, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Córdoba) - According to Mikael Olai Milhøj, Analyst at Danske Bank, the ISM manufacturing index has stabilized but at a weak level and he expects the index to rebound slightly in the coming months.

    Key Quotes:

    “ISM manufacturing increased slightly to 48.2. in January from 48.0 in December (revised down from 48.2). We and consensus had expected a slightly better print (48.5) but today’s release confirms that ISM manufacturing has stabilised although at a weak level.”

    “We expect ISM manufacturing has hit bottom and expect the index to rebound slightly in the coming months. However, the index will likely stay weak as the manufacturing sector still suffers from a combination of the very strong USD, the slowdown in manufacturing globally (especially in China) and the lower activity in the US energy sector. The risk to the economy is that there will be negative contagion effects on the non-manufacturing sectors.”

    “While the ISM manufacturing index is important for market sentiment, we think Fed will put more weight on the ISM non-manufacturing index due on Wednesday as it accounts for a larger share of the economy.”

    “Besides the release of ISM non-manufacturing on Wednesday, eyes are on the January jobs report on Friday. We expect non-farm payroll increased 200,000 (consensus: 190,000). That said, a weak jobs report will likely weigh on risk sentiment as the financial market
    turmoil in the beginning of the year partly reflects US growth concerns. A strong jobs report could calm markets and Fed as it would indicate a solid underlying growth trend in the US.”
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