- Manufacturing PMI expected to dip to 56.5 in December from 57.5.
- New Orders Index forecast to jump to 74.8.
- Employment Index to climb to 50.7 from 48.4.
- Dollar could receive a boost in the first major statistic of the New Year.
Can the US recovery continue as COVID-19 cases reach new levels? The question has not changed since diagnoses began to rise the fall.
Judging from the manufacturing sector where the Purchasing Managers' Index from the Institute for Supply Management (ISM) has been in expansion for six months and is expected to add a seventh in December, the answer is yes. The run from June has been the best half-year since the first six months of 2019.
Manufactruing PMI
The New Orders Index jumped from 31.8 in May to 56.4 in June and has not been below 60 since then. The forecast of 74.8 for December is astonishing. If accurate it would be the second highest score for expected business in the 70 odd years of the survey.
New Orders Index
Employment has lagged the other indexes throughout the recovery. It only reached the 50 expansion-contraction mark in October at 53.2 after 14 straight negative months. Then dropped back to 48.4 in November. It is projected to rise to 50.7 in December.
Initial Jobless Claims and Payrolls
Claims have had a jumpy two months as reverting lockdowns in California and restaurant restrictions in New York and elsewhere have pushed people back onto the unemployment rolls.
First time claims rose from a pandemic low of 711,000 in the week of November 6 to 787,000 two weeks later, fell back to 716,000 the following week, jumped back to 892,000 two weeks after that on December 11 and were 787,000 in the final period of the year.
Initial Jobless Claims
Continuing Claims have more stable with the last rise in the November 27 week and the latest reporting on December 18 at 5.219 million, the lowest of the pandemic era.,
Nonfarm Payrolls have weakened considerably in November falling to 245,000, less than half the 641,000 average of the prior two months. The December gain, to be released this Friday, is expected to be just 100,000. The unemployment rate is forecast to rise 0.1% to 6.8%. It would be the first increase since April.
Conclusion and the dollar
Manufacturing executives are looking and planning for the end of the pandemic sometime in the spring or early summer. Despite the gloom in the labor market that expectation should continue to keep the factory outlook optimistic.
The US dollar had a miserable December, losing ground in every major pair. Trends in December, especially in the liquidity-starved final two weeks, tend to exaggeration.
A strong December manufacturing ISM, ignoring the current COVID-19 diagnoses, could be just the tonic the greenback needs.
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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD holds gains near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold price defends gains below $2,400 as geopolitical risks linger
Gold price is trading below $2,400 in European trading on Friday, holding its retreat from a fresh five-day high of $2,418. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row, supported by lingering Middle East geopolitical risks.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.