US January ISM non-Manufacturing PMI disappointment

Ahead of Friday’s crucial NFP figures announcement, financial markets got a toll today by the disappointing US January ISM non-Manufacturing PMI data.  The data revealed that the US economy’s service sector expanded at a slower pace than December 2015.

The Institute for Supply Management (ISM) report revealed that the non-manufacturing index fell to 53.5 compared to 55.8 in December 2015 while the market analysts expected the data to be read at 55.1. The expectations were based on a poll of 73 economists conducted by Reuters.

Service sector is contracting

As an overall data indication, ISM non-manufacturing data reading above 50 indicates expansion in the service sector, which is positive for the economy and the USD and a reading below 50 indicates contraction, which is negative for the US economy and their currency.

The business activity index fell to 53.9 vs. 59.5 back in December 2015 which was also below expectations at 58.5. Bad for USD

The employment index fell to 52.1 vs, 56.3 December 2015, too. Bad for USD

According to the data, January’s new orders dropped to 56.5 vs. 58.9 in December. Bad for USD

The prices paid index fell to 46.4 from 51.0 the previous month. Bad for USD

The U.S. economy’s manufacturing sector contracted in January but was slightly improved from the previous month, according to an earlier ISM report.

Due to the data revealed, the USD took a toll by the market, shooting EURUSD, GBPUSD and crude oil higher, while USDCAD and USDJPY collapsed. We can see the current trend expectations shifting due to numerous fundamental announcements.  This is indeed what we also discussed in our last webinar on February Market Projections.

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