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US: Manufacturing remains under pressure - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 4, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - Analysts at ING noted that the Manufacturing ISM again highlighted the headwinds faced by the sector, but with service sector growth remaining firm and construction booming we are optimistic for 4Q GDP growth.

    Key Quotes:

    "The October US ISM manufacturing index has come in at 50.1, which is barely changed from September’s 50.2 figure. Consensus was 50.0, although the strong regional indicators on Friday had offered some hope of a marginally stronger figure.

    The details are mixed. Both new orders and production improved to stand at 52.9 – respectable growth territory, but employment fell to 47.6 from 50.5, presumably reflecting a lagged response to the recent softer activity figures. By falling into contraction territory (sub-50) this suggests some downside risk for Friday’s jobs number, although manufacturing is dwarfed by the service sector in terms of overall employment and a stronger non-ISM figure would raise optimism once again. Furthermore, with orders and production both rising, this should lead to a better manufacturing employment number next month.

    It is clear that the manufacturing sector is going to continue to underperform non- manufacturing given that dollar strength and external demand weakness are clear drags for the sector. However, we are more hopeful for the service sector, which is less impacted by this, while construction spending grew 0.6% MoM (+14.1% YoY). As such, the US economy is aggregate should perform better in 4Q15 than the disappointing 3Q reading of 1.5% annualised. This will keep thoughts of a December Fed rate hike alive."
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