US ISM manufacturing improves more than expected

Growth in the US economy’s manufacturing sector improved more than expected in November, according to the US Institute for Supply Management.

The ISM’s headline manufacturing index rose to 53.2 from 51.9 the month before, beating expectations of a 52.2 reading and marking its highest level in five months.

The employment index fell to 52.3 from 52.9, while the new orders index came in at 53 from 52.1.

The production index rose to 56 from 54.6 and the prices paid index was unchanged at 54.5.

Paul Sirani, chief market analyst at Xtrade, said: “Following October’s rise, a better than predicted advance in the ISM manufacturing PMI in November would suggest August’s deterioration was merely a bump in the road.

“Despite the continued uncertainty about the direction of the Trump administration, the manufacturing sector appears to be standing on an increasingly firm footing.

“If nonfarm payrolls also receive a significant uptick tomorrow, as is predicted, then there is much to be bullish about as we head into 2017.”

Capital Economics said the improvement in the ISM manufacturing index to a five-month high is another illustration that the US factory sector is gradually recovering from the impact of the dollar’s very big surge in late 2014 and in 2015.

"The dollar’s most recent post-election surge will put some renewed downward pressure on manufacturing but, for now at least, that latest surge is much smaller than the earlier gains and it follows a period of dollar depreciation earlier this year," it said.