Manufacturing PMI Declines to 47.9, Fails to Meet Analyst Predictions

• The Manufacturing PMI dropped from 49.4 in November to 47.9 in December.
• The manufacturing industry is facing sustained pressure due to low client demand.
• There is an oversupply of many goods, surpassing current demand.  

On January 2, the final Manufacturing PMI report for December was published by S&P Global. The report revealed a decline in Manufacturing PMI from 49.4 in November to 47.9 in December, falling short of the analyst consensus of 48.2. Figures below 50 reflect a contraction in the sector.

The report highlighted an escalation in inflationary pressures, with increasing cost burdens and the fastest rise in selling prices since April. S&P Global noted that there is an oversupply of many goods, suggesting potential risks for the manufacturing sector.

S&P Global stated, “Output decreased at the most rapid rate in six months due to intensified order book decline, implying that manufacturing will impact the economy negatively in the fourth quarter.”

Following the release of the report, the U.S. Dollar Index stabilized around 102.05 as traders responded to the findings. Today, Treasury yields are on the rise, which is offering significant support to the U.S. currency.

Gold prices continued their upward trend, attempting to surpass the $2070 mark. Despite a stronger dollar and increasing Treasury yields, the demand for safe-haven assets surged amid heightened tensions in the Red Sea, resulting in a bullish outlook for gold markets.

The SP500 index sustained pressure subsequent to the disappointing report, settling near the 4740 level. Rising Treasury yields and profit-taking following the recent rally are contributing to the bearish sentiment surrounding the SP500.