Today the U.S. Manufacturing ISM report was published and the U.S. Manufacturing PMI reached 50.6% during August. The U.S. Manufacturing PMI, which is an index that estimates the economic activity in the U.S. manufacturing sector, grew for the 25th consecutive month; the growth rate declined from 50.9% in July i.e. a 0.3 percent points decline. This means that while the US manufacturing sector is still growing, it grows at a slower pace in August compared to July.
Among the factors that were examined in this survey: the sharpest drop was in production from 52.3% to 48.6% – a decrease of 3.7 percent point; exports also fell by 3.5 percent points; on the other hand, among the factors that inclined were inventories – an increase of 3 percent point, followed by imports that inclined by 2 percent points.
According to Roache et. al (2008)* it was implied that the PMI Manufacturing ISM report has a positive lagged effect on natural gas prices, i.e. all things being equal and when controlling for the US dollar effect, as the PMI Manufacturing ISM index rises so does natural gas price. Further more, this news also has a negative effect on gold and silver prices, when not controlling for the US dollar effect. Currently, it seems that this news doesn’t have much of an effect on gold and silver prices as they are traded down.
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