U.S ISM non-manufacturing PMI misses analysts’ estimate of 54.5 in November

Amidst the U.S – China trade war, the U.S economy is showing signs of not performing as well as some would think. Earlier this week, November’s manufacturing PMI reported by the Institute of Supply Management was below both the analysts’ estimate and figure for October. The ISM announced the purchasing managers’ index for the services sector at 15:00 GMT on Wednesday. The report came as yet another shock to the U.S economy as it remained shy of the analysts’ forecast.

According to the ISM’s report, United States services PMI remained capped at 53.9 in November. The figure recorded in October (54.7) was considerably higher. Owing to the ongoing trade complications and the prospect of the trade war being stretched further, analysts were expecting the non-manufacturing PMI to drop slightly to 54.5 in November. Printing 53.9, the index surprised the analysts and investors alike with an aggressive response in the forex market.

Services Sector Accounts For Over 2/3^rd Of The U.S Economy

The services sector accounts for over 2/3^rd of the United States economy. While the index represents the U.S economy to no longer be lingering in contraction, missing the analysts estimate and dropping sharply as compared to October’s figure was still construed as largely negative for the greenback.

The ISM’s services PMI, however, wasn’t the only bad news for the U.S economy on Wednesday. Earlier in the day, the job growth in the United States’ private sector in November was reported to have dropped to a six-month low. The private sector’s job growth was noted at 121K in October. Analysts had previously forecasted the November’s report to be significantly better (137K). At 13:15 GMT on Wednesday, however, the report highlighted the job growth in the U.S private sector to have been lingering at 67K in November.

Following the largely negative economic data for the U.S economy, the U.S dollar index remained under pressure on Wednesday. Following a daily high of 97.73, the index slumped as low as 97.43 following the non-manufacturing PMI report. Much of the loss, however, has been regained in the past two hours with the index currently trading at 97.60.

Response In The Forex Market

The forex market was generous in responding to the economic data. As of Wednesday, Eur/Usd has finally broken above the long-held crucial resistance located at 1.1100 level and marked a daily high of 1.1115. Gbp/Usd had already broken above the immediate resistance at 1.30 following the UK’s final services PMI report in the morning. The decline in the U.S dollar index further pushed the pair above 1.3100 with Cable registering a high of 1.3115 for the day.