ISM Manufacturing PMI Preview: How worried are businesses? 3 scenarios for the potentially contrarian USD reaction

  • The ISM Manufacturing PMI is expected to edge up in March.
  • The data is forward-looking for the industry and a hint towards the NFP.
  • The US Dollar may gain a disappointment and fall on an upbeat number.

The ISM Manufacturing Purchasing Managers' Index for March is published on Monday, April 1st, at 14:00.

The indicator is a survey of businesses that ask them about the current situation and prospects looking forward. There is a significant correlation between the data and growth in the sector. The figure is a useful measure of the manufacturing sector and also serves as a hint towards Friday's Non-Farm Payrolls report for March.

When the PMI dropped sharply in December, it took markets with it. The recovery in January, alongside the improvement in financial markets, had analysts see December as a one-off. However, back in February, it dropped back to 54.2 points. The figure implies OK but unimpressive growth. Any score above 50 represents the expansion and below 50 represents contraction. 

The expectation for March is similar: 54.5 points. Before moving to the scenarios, it is important to remember that the Retail Sales report for February is published 90 minutes ahead of this release. The timetable is not the normal one. The consumption data has been delayed due to the government shutdown. See the Retail Sales preview.

3 scenarios

1) Within expectations: A score between 54 and 55 is likely to trigger some choppy movement, but no significant trends. The USD will likely extend the trend seen in the retail sales report.

2) Below expectations: Given the recent yield curve inversion and fears about an upcoming recession, the number may be lower. A score below 54 and especially a shocking drop under 50 (quite unlikely) will be very disappointing and show that businesses are fearful. In this case, the damp mood in markets may work in favor of the USD, a safe-haven asset. The greenback is unlikely to gain against the yen, the ultimate haven, but has room to rise against the rest.

3) Above expectations: A significant recovery in the ISM Manufacturing PMI above 55 points would already point to robust growth. It would revive hopes that the US could pull the whole world forward. Such an outcome could be beneficial for stocks, and risk assets, therefore adverse for the US Dollar. The greenback will have room for gains only against the yen.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD soars past 1.2900 as Farage gives additional boost to Conservatives

GBP/USD has leaped above 1.29, the highest since early November, as the Brexit Party has failed to field candidates in 43 additional seats, facilitating a victory for PM Boris Johnson.


EUR/USD advances 1.10 amid upbeat trade headlines, after mixed US retail sales

EUR/USD is trading closer to 1.1050, up on the day. US Commerce Secretary Ross has expressed optimism about reaching a deal with China. The Retail Sales Control Group met expectations with 0.3%.


USD/JPY clings to gains near session tops, around 108.70 post-US data

The USD/JPY pair maintained its strong bid tone near session tops and had a rather muted reaction to the mixed US economic data.


US Dollar Index challenges weekly lows near 98.00

The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main rivals, is now accelerating the downside and threatens to test the key support at 98.00 the figure.

US Dollar Index News

Trump Impeachment: Markets will not like any replacement

The public phase of the impeachment hearings against President Donald Trump has kicked off, with the US public and parties divided more than ever. How does it affect markets?

Read more

Forex Majors