It finally happened, as expected. The U.S. manufacturing index ISM recorded a decline in business activity in the manufacturing sector in November. The index value was 48.6%, lower than the previous month’s level of 50.1%. Markets had expected an increase to 50.6%.
Ten out of 18 U.S. industrial sectors reported a decline, indicating a strong reduction in order volumes (48.9%, a decrease of 4 p.p.), production (49.2%, a decrease of 3.7 p.p.), and raw material inventories (43.0%, a decrease of 3.5 p.p.). Only five sectors reported growth. According to the survey, none of the goods increased in price.
All this indicates that the U.S. manufacturing sector is facing increasing problems against the backdrop of the ongoing decline in oil and other commodity prices.
At the time of this news, the EUR/USD exchange rate reacted with a slight increase to 1.063, but failed to consolidate the gain. Dollar bulls continue to pressure rates in anticipation of the ECB meeting on December 3 and the Federal Reserve meeting on December 16.
However, it should be noted that the euphoria regarding the dollar’s strength is excessive. As soon as the Fed raises interest rates, the U.S. manufacturing sector will face even more pressure, and then no one will be able to talk about a strong economy, which will cause the value of the U.S. currency to fall, according to experts from ForTrader, which will begin to happen in 2016.
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“excerpt”: “U.S. manufacturing activity fell for the first time in three years, causing mixed reactions in the EUR/USD market.”,
“slug”: “u-s-industrial-sector-falls-first-time-three-years”,
“short_description”: “U.S. manufacturing activity fell for the first time in three years, causing mixed reactions in the EUR/USD market.”,
“faq_html”: “
FAQ
What caused the U.S. manufacturing sector to decline?
The decline in the U.S. manufacturing sector is attributed to falling oil and commodity prices, leading to reduced business activity across many industries.
How did the EUR/USD react to the news?
The EUR/USD briefly rose to 1.063 but failed to maintain the gain, showing mixed market reactions to the data.
What are the implications of this decline for the U.S. economy?
The decline suggests growing challenges in the U.S. manufacturing sector, which could lead to further economic pressures if interest rates rise and demand remains weak.
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