USD Lower As US Manufacturing Falls in Contraction

Manufacturing and the services sector contracted in Europe in the summer, while manufacturing in the US held up well until recently. Now the manufacturing sector has also contracted and the US dollar is falling following the release of flash S&P Global manufacturing and services reports. This puts even more pressure on the FED to slow down and likely stop rate hikes soon.

The S&P Global Flash US Manufacturing and Services PMI for November 2022

  • Manufacturing PMI for November 7.6 points versus 50.0 expectations.
  • Production in October was 50.4 points
  • Services PMI November 46.1 points versus 47.9 expected
  • October services were 47.8 points
  • Composite PMI 46.3 points versus 48.2 last month

From S&P Global:

“According to the latest ‘flash’ PMI™ data from S&P Global, there was a sharp contraction in business activity in the US private sector in November. Production in both manufacturing and services declined amid an increasingly sharp decline in demand. The overall decline in activity was the second fastest since May 2020, as inflation, rising borrowing costs and economic uncertainty weighed on demand.”

They added to the composite index:

“The reported contraction for the composite manufacturing index was the strongest since August and one of the fastest since 2009. Demand worsened as the fourth quarter progressed, with new private sector orders coming in November at the fastest pace since the first pandemic fell. wave in May 2020. Excluding the early stages of the pandemic, the decline in total new sales was the strongest since 2009. Both manufacturers and service providers recorded sharper declines in new customers, with many companies stating that the impact of inflation and interest rates had led to more hesitation and delay from customers placing orders”

On the services PMI they said:

“The S&P Global Flash US Services Business Activity Index was 46.1 in November, up from 47.8 in October. Excluding the first pandemic phase in the first half of 2020, the rate of decline was the second fastest on record. Panelists often argued that the impact of inflation and interest rates on customers’ disposable income had eroded demand conditions.”

On the manufacturing PMI, they said:

“At 47.6, down from 50.4 in October, the S&P Global Flash US Manufacturing PMI in November signaled a renewed deterioration in manufacturing conditions among manufacturers. The deterioration in the health of the sector was solid and the first since June 2020.”

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