US ISM Manufacturing PMI fell to 54.5 in September
- ISM Manufacturing PMI ticked lower to 54.5 in September, missing consensus.
- The US Dollar further extends its move higher, approaching 102.00.
In September, the US manufacturing sector's economy lost some momentum. Indeed, the ISM Manufacturing PMI weakened to 54.5 in September from 54.6, which was also lower than analysts' predictions of 55.0.
The Employment Index climbed to 52.7 from 51.2, which means that the sector's payrolls remain healthy. The Prices Paid Index, which monitors inflation, rose to 77.9 from 71.1. Finally, the New Orders index advanced to 55.3 from 53.7 in the previous reading.
From the release: “The overall economy continued in expansion for the 23rd month in a row… The New Orders Index expanded for the ninth consecutive month after four straight readings in contraction, registering 55.3 percent, up 1.6 percentage points compared to August’s figure of 53.7 percent. The September reading of the Production Index (56.7 percent) is 1.6 percentage points lower than the 58.3 percent recorded in August. The Prices Index remained in expansion (or ‘increasing’ territory), registering 77.9 percent, a notable increase of 6.8 percentage points compared to August’s reading of 71.1 percent.)”, argued Susan Spence, MBA, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.
Market reaction
The US Dollar (USD) advances further on Thursday, lifting the US Dollar Index (DXY) to levels just shy of the key 102.00 hurdle for the first time since April 2025.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.