Gold prices steady ahead of Fed decision; weekly weakness noted
The Institute of Supply Management (ISM) has released its Non-Manufacturing Purchasing Managers’ Index (PMI) report, revealing a decrease in the overall economic condition for the non-manufacturing sector. The ISM Services PMI, a composite index based on the diffusion indexes for four indicators with equal weights: Business Activity, New Orders, Employment, and Supplier Deliveries, has shown a decline.
The actual number released stands at 50.8. This figure is lower than the forecasted number of 53.0, indicating a deviation from the expected performance. The reading falls below the 50 percent threshold, which suggests that the non-manufacturing sector economy is generally contracting. This contraction is a shift from the previous expansionary phase, where the ISM Non-Manufacturing PMI was at 53.5.
This decline in the ISM Non-Manufacturing PMI is significant as it is based on data compiled from monthly replies to questions asked of more than 370 purchasing and supply executives in over 62 different industries. These industries represent nine divisions from the Standard Industrial Classification (SIC) categories, and the Business Survey Committee is diversified by SIC category and is based on each industry contribution to Gross Domestic Product (GDP).
This lower than expected reading is generally taken as negative or bearish for the USD. It suggests that the non-manufacturing sector, a significant contributor to the GDP, is facing challenges, likely impacting the overall economic performance and potentially the strength of the USD.
The ISM Non-Manufacturing PMI is a key indicator of the health of the non-manufacturing sector. As such, its decline could have implications for policymakers and investors alike, who will be closely monitoring the sector’s performance in the coming months.
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