US business condition in November
The November 2016 manufacturing PMI (Purchasing Managers’ Index) report indicates an improvement in the US business condition. It was 54.1 in November compared to 53.4 in October. It was above market expectations of 53.9.
November’s manufacturing PMI improved in the last two months after showing a weaker performance in September 2016. A level above 50 indicates expansion in activity, while anything below 50 indicates a contraction.
Let’s look at some of the key factors in the manufacturing PMI:
- Production volume rose in November 2016. The production index was 56, a rise of 1.4 points from October.
- New order growth also rose in November. The new order index stood at 53 points, a rise of 0.90 points from October.
- The inventories index also rose 1.5 points from October.
Performances of ETFs in October
The Industrial Select Sector SPDR ETF (XLI), which tracks the performance the US industrial sector, rose 10.4% in November 2016. The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500 Index (or SPXL) (IVV), rose 4.0% in November.
The dollar (UUP) is strengthening with expectations of a rate hike in December 2016. After the results of the US presidential election were announced, the US dollar continued its strong movement. The stronger dollar is showing that confidence in the economy is improving gradually. However, a stronger dollar may impact US exports and hurt the profitability of the industrial sector.
In the next part of this series, we’ll look at the performance of France’s manufacturing PMI in November 2016.
According to data provided by Markit Economics, the final manufacturing PMI for Germany was 54.3 in November 2016 compared to 55.0 in October.
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