Manufacturing PMI Inches Higher, But Still Signals Industry Contraction, Cements Case For Interest Rates On Hold

Zinger Key Points
  • The ISM manufacturing PMI rises to 47.6 in August, above the expected 47.
  • Still, it marks the 10th consecutive month of contraction for the industry, as new orders further decline.

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) saw a modest uptick to 47.6 in August, beating market expectations of 47.

While this marks an improvement from the previous month’s nearly three-year low of 46.4, it still signifies the 10th consecutive month of contraction in manufacturing activity as the gauge remained below the crucial 50-level threshold.

The S&P Global US Manufacturing PMI was upwardly revised from a preliminary estimate of 47 to 47.9 in August 2023, down 1.1 points from a month earlier. The report revealed that the sector saw a further deterioration in its business environment in August, largely attributed to a more pronounced decline in new orders.

On Friday, the Bureau of Labor Statistics painted a nuanced picture of the U.S. labor market for August. Although non-farm payrolls exceeded expectations with a gain of 187,000 jobs, the unemployment rate unexpectedly increased from 3.5% to 3.8%, and wage growth rose less than expected.

Overall, this week’s economic data eased pressure on the Federal Reserve to hike interest rates further. Markets currently assign only a mere 7% probability of a rate hike occurring in September, according to CME Group’s FedWatch tool.

U.S. stocks opened slightly higher on Friday, with the SPDR S&P 500 ETF Trust SPY up 0.3%, on track for the strongest week of gains since the end of March 2023.

Read now: August Job Creation Tops Forecasts, But Unemployment Ticks Higher, Wage Growth Slows

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Macro Economic EventsEcon #sTop StoriesEconomicsFederal ReserveETFsInterest RatesManufacturing PMIPMI
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!