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