ISM Manufacturing Index Falls To Lowest Point Since October 2016


ISM Non-Manufacturing Talking Points:

  • Despite missing estimates, the manufacturing sector continues to grow on the back of new orders and production
  • Trade issues and tariffs continue to be a noted concern of respondents in the survey
  • May marks the 33rd month of consecutive expansion for the index, however the rate of growth is slowing

The latest report from the Institute of Supply Management released their report on the manufacturing sector Monday morning, showing that US manufacturing is continuing to grow, reading 52.1 from 52.8 last month and 53 expected. Tariffs and trade issues continue to be a concern noted among survey participants, pushing the Index to its lowest since September 2009. That said, sentiment remains mostly positive with 11 of the 18 manufacturing industries showing growth.

The US Dollar continued to fall off its overnight highs, with the ISM data release showing little evidence of support for the DXY Index. The Dollar was trading at 97.54 at the time of writing, with the index continuing to lose steam in the past couple days after attempting to breach its recent high of 98.37 set on May 23.

US Dollar Basket Price Chart (DXY): 5 – Minute Time Frame (June 3)

DXY

Other notables in the ISM report include new order activity, registering 52.7 percent for May. A small gain from last month could suggest that businesses may be seeing an uptick in demand as inventory buildup also slowed. However, soft spots in the survey point to trade issues impacting manufacturing with tariffs being cited by several respondents noting an uptick in input prices. Some manufacturers also noted supply chain shifts with one respondent saying they are shifting their supply chain from China to Mexico.

–Written by Thomas Westwater, Intern Analyst for DailyFX.com

Contact and follow Thomas on Twitter @FxWestwater

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