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October US ISM Manufacturing PMI beats expectations - ING

FXStreet (Łódź) - Rob Carnell from ING comments on the US ISM Manufacturing PMI survey released today and showing an increase to 59.0 against forecasts of a drop to 56.2.

Key quotes

"The October manufacturing ISM survey for the US was very strong, coming in at 59.0, a rate historically consistent with a GDP rate of about 5%, though to put it into perspective, we don’t think the underlying rate of GDP growth is anything like that strong, though manufacturing is clearly doing better than the larger, service sector of the economy. Cheap energy is doubtless to thank for part of this outperformance."

"In terms of Friday’s payrolls release, the employment index rose to 55.5 from 54.6. Order backlogs also rose sharply, suggesting a need for greater investment or employment, or probably both in the months ahead."

"Interestingly, although new orders were up strongly to 65.8 from 60.0, the new export orders series actually fell slightly to 51.5 – in keeping with the weaker external environment, and suggesting that most of the US growth momentum currently comes from within."

"Over the next few days, we look for similar, though perhaps not so pronounced strength from the non-mfg ISM and ADP surveys of employment. With the Fed seeming to take a more hawkish stance with their latest statement, this could encourage thoughts of earlier Fed tightening than currently priced, pushing up bond yields, particularly at the front end of the yield curve, and providing the USD with further support."

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