U.S. PMI Index Increased to 54.2% in February

Yesterday, the U.S. Manufacturing ISM update came out; based on the recent report, the U.S. Manufacturing PMI index increased again to 54.2% during February 2013. The U.S. Manufacturing PMI is an index estimates the economic changes of the U.S. manufacturing sectors; this means the manufacturing sector has grown compared to the last month; the index increased from 53.1% in January to 54.2% in February i.e. a 1.1 percent point rise. This means that the U.S. manufacturing sector has expanded at a slightly faster rate than in the latest month.

Among the sectors that were analyzed in this survey: new orders, production, employment and exports. The production sharply increased by 4 pp to 57.6 – the production has expanded at a faster rate. New orders also grew at a faster rate in February as it reached 57.8. Other items, much like the PMI, have expanded at the faster rate during last month including: inventories, exports, and prices. On the other hand, employment fell, which means, it is still expanding at a slower rate.

The PMI Manufacturing ISM report tends to be negatively linked with the changes of gold and silver prices (Roache et. al (2008)) without controlling to the U.S dollar effect. Furthermore, the developments in PMI index suppose to positively affect natural gas prices, i.e. all things being equal, including the U.S dollar, as the PMI Manufacturing ISM index increase, natural gas prices also tend to rise.

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