The USD has been weak since early June, but the FED's rhetoric following the 25 basis point rate hike has transformed the picture. Markets expected the Fed's raising cycle to cease with this month's hike, but on Wednesday, they reintroduced the rhetoric of letting data define the future of additional raises, maybe in September. On Thursday, …
The USD has been weak since early June, but the FED’s rhetoric following the 25 basis point rate hike has transformed the picture. Markets expected the Fed’s raising cycle to cease with this month’s hike, but on Wednesday, they reintroduced the rhetoric of letting data define the future of additional raises, maybe in September.
On Thursday, we had a terrific batch of data from the US, with Q2 GDP coming in at 2.4% versus 1.8% predicted, retail sales rising, and unemployment claims declining, indicating a stronger labor market. As a result, the USD has gained some positive momentum during the last several trading days.
Today’s data wasn’t as good, but it wasn’t too horrible either. The ISM manufacturing PMI fell short of forecasts, but it did indicate improvement, and components point to a likely rebound from the lows.
ISM Manufacturing PMI for July 2023
ISM Manufacturing PMI for July was 46.4 points, as compared to 46.8 predicted.
The June ISM manufacturing index was 46.0 points.
Prices paid 42.6 points vs the predicted 42.8 points. It was 41.8 points last month.
Employment is 44.4 points higher than projected, at 48.0. 48.1 points last month
47.3 points for new orders over 45.6 points previously.
The manufacturing sector in the United States has been in a slump, but there are signs that the worst of it may be gone. You feel that the manufacturing industry has the potential for positive growth (upside risk) in 2024. One of the elements contributing to this upbeat prognosis is the “new orders” component, which appears to be improving. Because “new orders” is a forward-looking data point, it implies that businesses are receiving more orders for their products, which could be an early indicator of a manufacturing industry rebound.
New orders component
Job vacancies on JOLTs have also decreased, but the JOLTs data is older (from June), and there is some concern that it may not be “true” to the underlying demand for labor. Nonetheless, based on the chart above, it is off the boil from 2022 levels, but remains historically high (see chart above).
JOLTS lower but still elevated historically
Job Openings 9.582M vs 9.610M estimate
Prior month 9.824M (lower than the 9.935M estimate). Prior month revise to 9.616M
The rate of job openings was also unchanged at 5.8%.
The number of hires in June decreased to 5.9 million (-326,000), while the hire rate was little changed at 3.8%. The decrease in hires was seen in durable goods manufacturing (-54,000) and finance and insurance (-54,000)
Total separations, including quits, layoffs and discharges, and other separations, decreased in June to 5.6 million (-288,000). The rate of separations was little changed at 3.6%
The number of quits decreased to 3.8 million (-295,000) and the quit rate to 2.4%. The number of quits decreased in retail trade (-95,000), health care and social assistance (-75,000), and construction (-51,000). Quits increased in arts, entertainment, and recreation (+20,000).
Risk disclaimer:
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.
