BREAKING: U.S. ISM Manufacturing Data Misses Expectations. Dollar Reacts Sharply

The ISM Manufacturing Index for September came in at 54.5, compared with the expected 55.0 and 54.6 previously.

ISM Services Index – USA

• The ISM Prices Paid subindex rose to 77.9, compared with the forecast of 73.0 and 71.1 previously.

• The ISM Employment Index rose to 52.7, versus expectations of 52.0 and 51.2 previously.

• The ISM New Orders Index increased to 55.3 from 54.7 previously.

• U.S. construction spending rose by 0.9% m/m, compared with the forecast of 0% and a 0.5% decline previously.

Why are these data important?
The ISM Services Index is one of the key indicators used to assess the health of the services sector in the United States, which accounts for the vast majority of US economic activity. The report is based on surveys conducted among purchasing managers and shows whether businesses are experiencing improving or deteriorating operating conditions.

The most important components of the report are the employment and prices paid indexes. The employment index provides insight into labor market conditions and can offer additional signals ahead of official employment reports. Meanwhile, the prices paid index measures cost pressures in the services sector and serves as an important indicator of the future inflation outlook.

Current reading

The September ISM Manufacturing Index remained well above the 50-point threshold, indicating continued expansion in the sector, although the headline index came in slightly below expectations and was virtually unchanged from August. At the same time, the increase in new orders, improvement in the employment component, and strong rebound in construction spending suggest that domestic demand remains relatively solid. The biggest risk in the report is the sharp increase in the Prices Paid subindex to 77.9, which could sustain concerns about producer-side inflationary pressures and limit room for a more dovish shift by the Fed.

Source: XTB Research