The September US ISM Manufacturing PMI survey came in weaker than expected, with the index remaining flat at 47.2 to reflect the same pace of industry contraction rather than improving to expectations of 47.6.
This was the sixth month in a row that the index remained below 50.0, with the majority of components reflecting a slowdown during this period. In particular, the prices sub-index fell by 5.7 points to 48.3 from August’s reading of 54, the first deflationary reading so far this year.
The employment component came in at 43.9, down 2.1 points from the previous reading of 46, while new orders rose from 44.6 to 46.1. The production index also improved from 44.8 to 49.8 but remained in contraction while inventories also declined.
Link to ISM US Manufacturing Survey (September 2024)
“Demand remains weak, production has declined, and inputs have remained accommodative.” Institute for Supply Management President Timothy Fiore noted.
“Demand remains weak, as companies have shown an unwillingness to invest in capital and inventory due to federal monetary policy – which the US Federal Reserve has addressed by the time of this report – and election uncertainty.
Market reactions
Overlay of the US dollar against major currencies Chart by TradingView
The US dollar, which saw high volatility about an hour before the ISM Manufacturing PMI, had a brief bearish reaction to the weaker than expected results.
USD/JPY and USD/CHF were already trending lower before the report, so these pairs recorded the steepest declines afterwards. The dollar’s losses against the New Zealand dollar and the Australian dollar were quickly pared, with the US currency recovering almost immediately against the majority of its counterparts.
The JOLTS Job Opportunities report was also released at the same time, and the numbers were stronger than expected at 8.04 million in July versus the expected reading of 7.64 million and the previous figure of 7.71 million.