Source: Jin10 Data
Due to high loan costs, limited enterprise equipment investment, and weak consumer spending, the manufacturing industry in the USA is struggling to gain growth momentum.
On Monday, a survey showed that US manufacturing activity slowed for the second consecutive month in May due to the largest decline in new orders in nearly two years.
The Institute for Supply Management's (ISM) Manufacturing Purchasing Managers' Index (PMI) fell from 49.2 in April to 48.7 in May, the lowest level in three months and the second consecutive monthly decline.
After the data was released, gold briefly rose above the $2340 level, but failed to hold steady; the US Dollar fell nearly 30 points in the short term.
For over a year, the manufacturing sector has been under pressure, with the ISM Production Index in a contraction phase for 18 of the past 19 months.
At the start of the year, people generally hoped that the Fed would begin cutting interest rates in the middle of the year, but higher-than-expected inflation rates in the first quarter forced Fed officials to postpone this expectation. The market now believes that the Fed may start cutting interest rates as early as September.
Due to borrowing costs being at their highest level in around 20 years, the manufacturing sector's new orders index saw its largest decline since June 2022, falling 3.7 points to 45.4, the lowest level in a year. After experiencing declines for most of 2023, factory input costs have accelerated again this year, but May's data shows that the ISM price paid index fell from a high of 60.9 in June 2022 to 57, still the second-highest level in around two years.
In addition, factory employment saw its first growth since September of last year, breaking out of a mostly sluggish state over the past two years, indicating greater success in manufacturers' efforts to secure labor.
Timothy Fiore, Chairman of the ISM Manufacturing Business Survey Committee, said in a statement, "Demand is still elusive as businesses react to current monetary policy and other environmental headwinds that discourage investment. Such investments include supplier order commitments, inventory builds and capital expenditures."
These data indicate that due to high borrowing costs, limited corporate equipment investment, and weak consumer spending, the US manufacturing sector is struggling to gain growth momentum. At the same time, manufacturers are fighting against rising input costs.
In addition to the PMI data tonight, investors will also be watching Wednesday's ADP employment report and Friday's non-farm payrolls data. UBS Group analyst Giovanni Staunovo said, "We still expect the slowdown in US economic data to allow the Fed to cut interest rates later this year, which will boost gold prices."
Editor / jayden