US PMI manufacturing index declined to 50.9%

According to the recent U.S. Manufacturing ISM report regarding the U.S. Manufacturing PMI– an index that estimate the economic activity in the U.S. manufacturing sector –grew for the 24th consecutive month;  on the other hand, the growth rate declined from 55.3% in June to  50.9% growth in July, i.e. a 4.4 percent points decline. This means that while the US Manufacturing sector is still growing, it grew at a slower pace in July compared to June.

Among the factors that were examined in this survey, the prices dropped the sharpest last month by 9 percent point; the sharpest rise was in imports that inclined by 2.5 percent points.

According to the work done by Roache et. al (2008) named “the effects of economic news on commodity prices: is gold just another commodity?”  It was implied that the news of the PMI Manufacturing ISM has a positive lagged effect on natural gas prices, i.e. all things being equal, as the PMI Manufacturing ISM index rises so does natural gas price. Yesterday, natural gas prices finished rising, but if they will shift direction and drop, this news about the PMI Manufacturing might be partially responsible for this shift.


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