Big disappointment from ISM Manufacturing PMI, strong negative signal for US jobs report

US ISM Manufacturing PMI Employment Index plummeted in August.
Very negative signal for Friday's jobs report.
Negative surprises outweigh positive ones in the NFP leading indicators table.

Jordi Martínez FXStreet

The Employment Index in the ISM Manufacturing PMI survey plunged in August to 47.4, falling well below the neutral 50 level from the 51.2 printed in July. This report shows a very strong negative signal for next Friday's US employment report, as pessimism is expanding through manufacturers, which could cut the number of jobs added. Markets have certainly reacted to the news selling the US Dollar, with EUR/USD quickly bouncing back 30 pips.

According to our NFP Crash Course, the US ISM Manufacturing PMI tends to provide a meaningful signal to Non-Farm Payrolls as manufacturing jobs are easier to measure than service-sector ones.

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This is the fifth leading indicator published for the upcoming Non-Farm Payrolls report. As of now, the couple of negative signals released seem to outweigh the positive ones, as both this ISM Manufacturing PMI and the University of Michigan Consumer Sentiment survey printed big negative surprises. The Conference Board Consumer Confidence survey and the JOLTS Job Openings reported better-than-expected numbers, which might temper a bit negative expectations for next Friday.

Thursday will be a big US-data-release day, as five more key NFP leading indicators will be released, with the ADP Employment Report and the ISM Non-Manufacturing PMI getting the bigger focus.

US jobs report pre-release checklist – Sep 6th, 2019

Previous Non-Farm Payrolls	Neutral	Matched expectations at 164k jobs added.
Challenger Job Cuts	-	Expected to be released on Thu, Sept 5th at 12.30 GMT. Previous number printed 38.845k.
Initial Jobless Claims	-	Expected to be released on Thu, Sept 5th at 12.30 GMT. Four-week average is at 214.5k.
Continuing Jobless Claims	-	Expected to be released on Thu, Sept 5th at 12.30 GMT. Forecasted to print 1.685M.
ISM Non-Manufacturing PMI	-	Expected to be released on Thu, Sept 5th at 14 GMT.
ISM Manufacturing PMI	Negative	Falling from 51.7 in July to 47.4 in Auguste is a big disappointment on the Employment Index of the very important manufacturing business survey.
University of Michigan Consumer Confidence Index	Negative	UMich consumer survey plunged below 90 in August, falling nearly 10 points in one month, an awful reading.
Conference Board Consumer Confidence Index	Positive	The Conference Board Consumer Confidence Index® stayed at higher-than-135 levels in August, a better-than-expected number.
ADP Employment Report	-	Expected to be released on Thu, Sept 5th at 12.15 GMT. Forecasted to print 148k.
JOLTS Job Openings	Positive	Job openings beat expectations in June, printing 7.348 million above the 7.317 million expected. Revised figure for May was also bullish.

Author

Jordi Martínez

FXStreet

Jordi Martínez is the Editor in Chief at FXStreet, leading editorial operations at the company, before being promoted to the role in 2023, he worked in several editorial positions at FXStreet, including roles as Senior

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