- Business survey suggests contraction in the U.S manufacturing sector to have completed its run.
- Philly Fed Manufacturing Index records at 36.7 in February versus 10.1 expected.
- Phase 1 deal with China, agreement with Mexico and Canada, and Brexit likely to fuel further growth.
- Boeing struggles continue to be a challenge for the U.S manufacturing sector.
- EUR/USD remains under pressure and trades below 1.80 level on Thursday.
According to a recent business survey, the ongoing contraction in the manufacturing sector of the United States that was charged by the trade tensions with China and the global economic slowdown is running out of fuel earlier than previously thought.
While the economy continued to grow, the second half of 2019 brought bad news for the U.S factories that spurred concerns of a broader recession that stemmed from this sector. Thanks to the optimism of Philadelphia and New York Fed districts on Thursday, however, such a risk is quickly fading away. The Philly Fed Manufacturing Index beat Wall Street estimates by a significant margin in February.
New York’s Empire State Manufacturing Survey Records 8 Points Higher In February
The New York’s Empire State Manufacturing Survey highlighted earlier this week that the general business conditions posted an 8 points increase in February to record at 12.9 – its highest since last May. At 22.1, new orders were reported at their best since September 2017 while shipments noted a new best in over a year at 18.9.
Thursday’s data showed the Philadelphia survey to have gained 20 points in February to print at 36.7 that was branded its best since February 2017. New orders were recorded at their best in almost two years.
Figures for January were registered significantly lower. The Philly manufacturing index was recorded at 17.0 last month while the analysts had anticipated it to drop even further to 10.1 in February.
According to the Vice-Chairman of U.S Fed, Richard Clarida, much of the optimism of February’s readings can be attributed to the phase 1 trade deal with China signed on January 15th and another with Mexico and Canada. He further added that the departure of the UK from the EU on January 31st should also remove uncertainty from the global economic picture that will be mirrored in the U.S economic growth as well.
Boeing’s Struggles Continue To Be A Challenge For The U.S Manufacturing Sector
As per the experts, a still remaining major challenge for U.S manufacturing is that of Boeing’s ongoing struggles. The U.S Labor Department previously suggested a 0.1% contraction in the manufacturing index in January. Excluding the impact of Boeing’s production halt amidst a global ban on its fuel-efficient 737 Max, however, the index recorded a 0.3% expansion in January. Boeing is the largest U.S plane manufacturer.
EUR/USD remained under pressure on Thursday. While the currency pair surged to 1.0820 earlier in the day, it was almost immediately followed by a decline back to 1.0785 level.