UK’s Manufacturing PMI beats the estimates

Feb 03 2016, 10:16 am
Uk Inflation_BoE

On Monday, we find out that UK’s January Manufacturing PMI (Purchasing Managers Index) came out 52.9 marking a three-month high and surpassing estimations. It came above December’s 52.1 with an improvement in domestic demand and a significant growth in output. In other words, the manufacturing production increase in the month of January reflects the increase in new work inflow from the domestic market. For what regards the output, the rate of expansion accelerated at a nineteen-month high, but the new export orders went back into decline. The lower export sales, however, were associated with an expanding competition and rough market conditions. Drilling down into the headline numbers, the main factors that driven the output’s pace increase were the investments in the goods sector and, of course, the retail consumers. A spike in the rate of expansion was also recorded at the intermediate goods producers’ level. The large-size manufacturers reported the same positive performance while at the SME’s level (Small and Medium Enterprises) we can see a mild attenuation in the growth pace.

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The GBP/USD major was pushed up reaching the 1.4267 handle under the bullish pressure after the release of the Markit Manufacturing PMI and ISM index (Institute of Supply Management) which pointed to a slowdown in the US economy. ISM data especially revealed a decline in the job sector for the month of January with the employment sub-index falling to 45.9 from December’s 48.0. Just before the ISM release, the Markit Manufacturing PMI came under par posting 50.0. On the opposite end, the ISM PMI beat its estimates but remained below the 50.0 threshold highlighting further contraction in the market’s activity. At the moment of writing, the pair is trading slightly above 1.4351 at 23.6% of the 1.4079 – 1.5230 interval.

Yesterday, RBA (Reserve Bank of Australia) left the official interest rate untouched at 2% – as widely expected, saying that the purpose is the existence of a “safety net” in case further easing is needed as lower rates come in support for the demand. In which regards the AUD, RBA stated that the trend is actively adjusting to the decline in commodity prices, noting that there are prospects for a steady growth in the non-mining sectors of the economy improving during 2015.

Crude prices went down yesterday, lingering just above the $30.00 per barrel line. The “usual” supply-glut emphasized by Iran’s indecision for an output growth in an already over-saturated market are pressing investors and pushing prices into a five-day low. The rumor of foul play between Russia and Saudi Arabia in regard to the collaboration also adds more “fuel to the fire”, to say the least.

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Technical Strategist, CMT level 2 (MTA). Looking for good opportunities in the market, wherever they are, since 2009.

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