How the Improving US Manufacturing PMI Could Impact Markets
US manufacturing PMI in October
The final US manufacturing PMI (purchasing managers’ index) for October stood at 54.6, compared with 53.1 in September, meeting the preliminary market expectations of 54.5 and showing a solid improvement.
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The US manufacturing PMI rose in October due to the following reasons:
- higher production volumes in October due to improvements in market and business conditions
- faster rising new order growth rate in October
- faster growing employment in the manufacturing sector in October—a 28-month high
The October manufacturing PMI in the US showed the strongest improvement since February 2017, and the solid improvements in production volumes are signaling that both international demand and domestic demand have improved in the economy.
As anticipations of tax reform rise, major US indexes have seen a boost, and manufacturers are improving their production requirements on expectations of stronger demand in the near future.
Performance of various ETFs in October
The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500 Index, rose nearly 2.3% in October, while the PowerShares QQQ Trust Series 1 (QQQ), which tracks the performance of major technology stocks in the US, rose ~4.6%.
In the next part, we’ll analyze the performance of France’s final manufacturing PMI for October 2017.