Gold prices near session lows as ISM Manufacturing PMI rises to 47.6% in August

Fri Sep 01 2023

Gold prices remained near session lows after the latest data on the U.S. manufacturing sector showed it improved, but it still contracted for the tenth consecutive month.

The Institute for Supply Management (ISM) manufacturing index came in at 47.6% for August, after posting a 46.4% print in July. Market consensus calls were expecting a reading of 47%.

Readings above 50% in such diffusion indexes signify economic growth and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.

Following the release, gold prices remained relatively stable near session lows. Spot gold last traded at $1,940.79, up 0.05% on the day.

The employment index improved by 4.1 percentage points to 48.5% in August after a 44.4 reading in July. This followed the highly anticipated August nonfarm payrolls report released earlier Friday morning which showed the U.S. economy created 187,000 jobs in August, beating expectations.

The index for new orders remained in contraction territory, declining to 46.8 from July’s 47.3% print.

The prices index was also in contractionary territory, but rose 5.8 percentage points in August to 48.4% from July’s figure of 42.6%.

“The U.S. manufacturing sector shrank again, but the uptick in the PMI indicates a slower rate of contraction,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “The August composite index reading reflects companies managing outputs appropriately as order softness continues, but the month-over-month increase is a sign of improvement.”

Fiore noted that of the six biggest manufacturing industries, “three — Transportation Equipment; Food, Beverage & Tobacco Products; and Petroleum & Coal Products — registered growth in August.”

“Demand remains soft, but production execution is consistent with new, reduced output levels based on panelists’ companies order books,” he said.

Source: https://www.kitco.com/