Breaking: ISM Manufacturing PMI improves to 47.1 in April vs. 46.6 expected


The economic activity in the US manufacturing sector continued to contract in April, albeit at a softer pace than it did in March, with the ISM Manufacturing PMI edging higher to 47.1 from 46.3. This reading came in slightly better than the market expectation of 46.6.

Further details of the report revealed that the Employment Index advanced to 50.2 from 46.9 and the New Order Index improved slightly to 45.7 from 44.3. Finally, the Price Paid Index, the input inflation component, jumped to 53.2 from 49.2.

Commenting on the data, “the US manufacturing sector contracted again; however, the Manufacturing PMI improved compared to the previous month, indicating slower contraction," said Timothy R. Fiore, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. "The April composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period."

Market reaction

The US Dollar gathered strength with the initial reaction to the data. At the time of press, the US Dollar Index was up 0.25% on the day at 101.90.

When will the next United States ISM Manufacturing PMI be released?

The following United States ISM Manufacturing PMI will be released on Friday, June 1st, at 14:00 GMT.

Stay tuned to all the upcoming events that may affect the markets on our economic calendar.
 


  • The ISM Manufacturing PMI is set to rise to 47.0 from 46.9, New Orders seen higher at 45.5.
  • The ISM Prices Paid Index is seen expanding to 50.4 from 49.2 in the previous month.
  • Purchasing Managers’ Index will be released by the ISM at 14:00 GMT.

The main Manufacturing Purchasing Managers’ Index (PMI) in the United States will be released by the Institute of Supply Management (ISM) in its Report on Business, where the latest manufacturing business survey result is displayed, at 14:00 GMT this Monday.

What to expect from the ISM manufacturing PMI report?

The most important manufacturing PMI in the United States is expected to have risen slightly to 47.0 in April from the 46.3 figure booked in March.

Among the sub-components of the report, the focus will be on Prices Paid as it reflects business sentiment around future inflation. The Manufacturing Prices Paid sub-index is likely to return to expansion, with a 50.4 expected for April. In March, the gauge stood at 49.2.

The ISM Manufacturing Employment Index is also seen a tad higher at 47.9 in the fourth month of the year while the New Orders Index for April is foreseen at 45.5 vs. March’s 44.3.

In March, the ISM survey showed that all subcomponents of its manufacturing PMI were below the 50 threshold for the first time in 14 years. The headline index tumbled to its lowest level in three years, as new orders plunged. The US Federal Reserve’s (Fed) relentless tightening to fight inflation raised borrowing costs and cooled demand for goods.

The data will provide a fresh update on the health of the US manufacturing sector amid tighter financial conditions and growing recession risks, especially after Thursday’s US Gross Domestic Product (GDP) data for Q1.

Apart from the US economic data, investors will track the broader market sentiment in the lead-up to Wednesday’s Federal Reserve policy announcements.

Analysts at TD Securities offer a brief preview of the key macro data and explain: 

“Surveys already released point to a small rebound for both the ISM manufacturing and services indexes in April following their twin declines in March to 46.3 and 51.2, respectively. We look for the ISM Manufacturing index to advance modestly to a less dire level at 47.5. The services index likely rose as well but to 52.2, indicating a modest improvement in the pace of expansion for the sector."

When will the ISM manufacturing Purchasing Managers’ Index report be released and how could it affect EUR/USD?

The ISM Manufacturing PMI report is scheduled for release at 14:00 GMT, on May 1. Ahead of the key release, the US Dollar staged a decent comeback from two-week lows, fuelling a corrective downside in the EUR/USD pair toward 1.1000. The main currency pair hit a new 13-month high at 1.1096 last Wednesday.

A stronger headline print will bolster bets for a 25 basis points (bps) Fed rate hike move in early May. This, in turn, should fuel a fresh leg higher in the US Treasury bond yields, aiding the recovery of the US Dollar.

Last week, even though the headline US Q1 GDP number missed estimates of 2.0% QoQ by a wide margin at 1.1%, resilient personal consumption, inventories accumulation and a higher inflation component grabbed investors’ attention and ramped up odds of a quarter percentage point Fed rate hike next week to 86%. At the start of the week, the probability of a 25 bps Fed May rate hike stood at around 75%.

However, a softer report could act as a headwind to the ongoing recovery momentum in the US Dollar. The US Dollar decline could follow, driving the EUR/USD pair back toward the yearly top.

Traders will also pay close attention to the ISM survey's forward-looking New Orders sub-index, the Prices Paid component and the measure of factory employment for fresh implications on the Fed’s interest rates outlook. Markets could resort to repositioning ahead of the all-important Federal Reserve interest rates decision, which could affect the pair’s reaction to the ISM survey.

Eren Sengezer, Editor at FXStreet, offers a brief technical overview of the EUR/USD and writes: “Despite the pullback seen in the second half of the previous week, EUR/USD manages to hold above the 20-day Simple Moving Average, currently located at 1.0970. Meanwhile, the Relative Strength Index (RSI) indicator on the daily chart stays slightly above 50, reflecting the lack of bearish pressure for the time being”

"If buyers fail to defend 1.0970, additional losses toward 1.0900 (psychological level) and 1.0800 (50-day SMA) could be witnessed," Eren adds further. "In case the pair stabilizes above 1.1000 and continue to use this level as support, it could face interim resistance at 1.1050 (static level) before targeting fresh multi-month highs at 1.1100."

ISM manufacturing PMI related content

 

United States ISM Manufacturing PMI

The Institute for Supply Management (ISM) Manufacturing Index shows business conditions in the US manufacturing sector It is a significant indicator of the overall economic condition in US. A result above 50 is seen as positive (or bullish) for the USD, whereas a result below 50 is seen as negative (or bearish). Read more.

Next release: Mon May 1st, 2023 14:00
Frequency: Monthly
Source: Institute for Supply Management

Why it matters to traders?

The Institute for Supply Management's (ISM) Manufacturing Purchasing Managers Index (PMI) provides a reliable outlook on the state of the US manufacturing sector. A reading above 50 suggests that the business activity expanded during the survey period and vice versa. PMIs are considered to be leading indicators and could signal a shift in the economic cycle. Stronger-than-expected prints usually have a positive impact on the USD. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are watched closely as they shine a light on the labour market and inflation.

 

Share: Feed news

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


Recommended content

Editors’ Picks

EUR/USD recovers toward 1.0850 as risk mood improves

EUR/USD recovers toward 1.0850 as risk mood improves

EUR/USD gains traction and rises toward 1.0850 on Friday. The improvement seen in risk mood makes it difficult for the US Dollar (USD) to preserve its strength and helps the pair erase a portion of its weekly losses. 

EUR/USD News

GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD staged a rebound and stabilized above 1.2700 after dropping to a weekly low below 1.2680 in the early European session in response to the disappointing UK Retail Sales data. The USD struggles to find demand on upbeat risk mood and allows the pair to hold its ground. 

GBP/USD News

Gold rebounds to $2,340 area, stays deep in red for the week

Gold rebounds to $2,340 area, stays deep in red for the week

Gold fell nearly 4% in the previous two trading days and touched its weakest level in two weeks below $2,330 on Thursday. As US Treasury bond yields stabilize on Friday, XAU/USD stages a correction toward $2,340 but remains on track to post large weekly losses.

Gold News

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Kabosu, the popular Shiba Inu dog that inspired the logo of the largest meme coin by market capitalization, Dogecoin (DOGE), died early on Friday after losing her fight to leukemia and liver disease.

Read more

Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight

Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight

Dollar traders lock gaze on core PCE index. Eurozone CPIs in focus as June cut looms. Tokyo CPIs may complicate BoJ’s policy plans. Aussie awaits Australian CPIs and Chinese PMIs.

Read more

Forex MAJORS

Cryptocurrencies

Signatures