USD: Breaking: US S&P Global Manufacturing PMI Surprises Positively in May
The US Manufacturing PMI data came at 50.9 in the May month versus 50.0 is printed in the last month. Composite PMI came at 54.4 from 51.3 printed in the April month, Services PMI data printed at 54.8 in the May month from 54.4 printed in the last month. The expansion in the all regions of PMI data in the US economy moved US Dollar higher against counter pairs.
EURUSD is moving in Descending channel and market has reached lower high area of the channel
The flash estimate for May’s US S&P Global Composite PMI revealed a significant improvement, reaching 54.4, up from 51.3 in April. This indicates that business activity in the US private sector continued to grow at a swifter pace.
Simultaneously, the S&P Global Manufacturing PMI increased from 50.0 to 50.9 during the same period, signaling an expansion in the manufacturing sector. Moreover, the S&P Global Services PMI rose from 51.3 to 54.8.
According to a news release, “US business activity growth accelerated sharply to its fastest pace in just over two years in May, as per provisional PMI survey data from S&P Global, indicating an improved economic performance midway through the second quarter. The service sector spearheaded the upturn, reporting the largest output rise in a year, while manufacturing also exhibited stronger growth.”
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, remarked, “The US economic upturn has accelerated again after two months of slower growth, with the early PMI data signaling the fastest expansion in just over two years in May. The data put the US economy back on course for another solid GDP gain in the second quarter.”
USD: US Business Activity Accelerates in May, Price Pressures Mount
In May, the US Manufacturing PMI data recorded a figure of 50.9, marking an improvement from the previous month’s reading of 50.0. Meanwhile, the Composite PMI surged to 54.4 from the April figure of 51.3, indicating robust expansion. Additionally, the Services PMI data climbed to 54.8 in May, up from the previous month’s reading of 54.4. This widespread expansion across all sectors of the PMI data in the US economy bolstered the US Dollar against other currencies.
USDJPY is moving in Ascending channel and market has rebounded from the higher low area of the channel
In May, U.S. business activity surged to its highest level in just over two years, indicating a significant acceleration. However, manufacturers reported a notable increase in prices for various inputs, suggesting that inflation in goods could intensify in the coming months.
According to S&P Global’s report released on Thursday, the flash U.S. Composite PMI Output Index, which tracks both the manufacturing and services sectors, leaped to 54.4 this month. This marks the highest level since April 2022, following a final reading of 51.3 in April. A reading above 50 signifies expansion in the private sector. Economists surveyed by Reuters had anticipated the index to remain relatively stable at 51.1. The upswing was primarily driven by the services sector, with the flash PMI rising to 54.8 from 51.3 in April, while the manufacturing flash PMI edged up to 50.9 from 50.0.
On the surface, this surge in activity suggests that economic growth gained momentum halfway through the second quarter. However, despite this positive indicator, data for April, including retail sales, housing starts and permits, as well as industrial production, indicated a further slowdown in the economy at the beginning of the second quarter. Additionally, the labor market is exhibiting signs of deceleration.
Chris Williamson, chief business economist at S&P Global Market Intelligence, noted, “Business confidence has lifted higher to signal brighter prospects for the year ahead. However, companies remain cautious regarding the economic outlook due to uncertainty over the future path of inflation and interest rates, along with concerns over geopolitical instabilities and the upcoming presidential election.”
The S&P Global survey’s measure of new orders received by private businesses increased to 51.7 this month from 49.1 in April. However, the measure of employment contracted for the second consecutive month, although the rate of decline moderated.
Businesses experienced elevated prices for inputs, with the manufacturing input prices index reaching its highest level in one-and-a-half years. This increase was attributed to higher supplier prices across a range of inputs, including metals, chemicals, plastics, timber-based products, energy, and labor costs. Consequently, there are indications that goods disinflation may be nearing its end.
Higher staffing costs also contributed to increased expenses for services businesses, prompting companies to pass these higher costs on to customers by raising selling prices.
Williamson observed, “What’s interesting is that the main inflationary impetus is now coming from manufacturing rather than services, meaning rates of inflation for costs and selling prices are now somewhat elevated by pre-pandemic standards in both sectors to suggest that the final mile down to the Federal Reserve’s 2% target still seems elusive.”
USD: U.S. Activity Rebounds in Survey Findings
In the month of May, the US Manufacturing PMI data exhibited a notable uptick, registering at 50.9, representing an advancement from the preceding month’s figure of 50.0. Simultaneously, the Composite PMI surged to 54.4 from its April reading of 51.3, indicating a robust expansion in economic activity. Furthermore, the Services PMI data showed an upward trend, reaching 54.8 in May compared to the previous month’s reading of 54.4. This widespread expansion across all sectors of the PMI data in the US economy contributed to the strengthening of the US Dollar against its currency counterparts.
USDCAD is moving in Ascending channel and market has rebounded from the higher low area of the channel
This month, economic activity in the United States accelerated, as indicated by business surveys released on Thursday, reaching its highest level in over two years.
According to the S&P Global Flash U.S. Composite PMI, which assesses activity in both the manufacturing and services sectors, the index rose to 54.4 in May from 51.3 in April. This marks a 25-month high and the first instance since January where the index hasn’t decelerated. A reading above 50 signifies expansion in private-sector activity.
The manufacturing sector saw an increase to 50.9, while services surged to 54.8 on the index, surpassing economists’ expectations as per Wall Street Journal polls.
Despite the acceleration in activity, inflation remains persistently high in the U.S. The Federal Reserve has adjusted its stance, dialing down expectations for rate cuts, previously anticipated to commence this summer, until price increases ease sustainably.
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