US business condition in September
The US September manufacturing PMI (purchasing managers’ index) report indicated an improvement in US (QQQ) (IWM) business conditions. The reading stood at 51.5 in September compared to 49.4 in August 2016, and it was above the market’s expectations of 50.3.
September manufacturing PMI improved after showing a contraction in August 2016. A level above 50 indicates expansion in activity, while anything below 50 indicates contraction.
Let’s look at some of the key factors that influenced the manufacturing PMI:
- Production volume rose in September 2016. The production index stood at 52.8, an increase of 3.2 points from the August figure.
- New order growth rose during the same month. The new order index stood at 55.1, an increase of six points from the August figure.
- The inventories index rose 0.5 points from its August figure and stood at 49.5.
Performance of various ETFs in August
The Industrial Select Sector SPDR ETF (XLI), which tracks the US industrial sector, fell 0.9% in September 2016. The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500 Index, fell 0.6% in September 2016.
The appreciation of the US dollar (UUP) continues to weigh down the US industrial sector. The dollar is strengthening on expectations of a rate hike in December 2016. The dollar weakened marginally in the previous months due to the Fed’s dovish stance.
In the next part of this series, we’ll analyze the performance of France’s manufacturing PMI in September 2016.