U.S. Manufacturing PMI Index Rose to 50.7% in December

Yesterday, the U.S. Manufacturing ISM report was published; according to the latest report, the U.S. Manufacturing PMI index bounced back and rose to 50.7% during December 2012. The U.S. Manufacturing PMI is an index estimates the economic development of the U.S. manufacturing sectors; this means the manufacturing sector has shifted from contraction to growth compared to the previous month; the index rose from 49.5% in November to 50.7% in December i.e. a 1.2 percent point gain. This means that the U.S. manufacturing sector has expanded after it had contracted in the previous month.

Among the sectors that were analyzed in this survey: new orders, production, employment and exports. The production declined by 1.1 pp to 52.6 – the production has expanded at a slower pace. New orders are still growing at the same pace in November as it remained at 50.3. Some items, much like the PMI, have shifted from contraction to expansion during last month including: employment, exports and imports. On the other hand, inventories declined to 45, which means, inventories are contracting at a faster pace.

The PMI Manufacturing ISM report tends to be negatively correlated with the changes of gold and silver prices (Roache et. al (2008)) without controlling to the U.S dollar effect. Furthermore, the change 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 rise, natural gas prices also tend to increase.

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