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What January Manufacturing Reports Signal for Developed Markets

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Part 2
What January Manufacturing Reports Signal for Developed Markets PART 2 OF 9

Constant Rise in US Manufacturing PMI: Solid Business Climate

US Manufacturing PMI in January 2018

The January 2018 final US Manufacturing PMI (Purchasing Managers’ Index) stood at 55.5 compared to 55.1 in December 2017. It met the preliminary market expectation of 55.5. Its solid improvement in January was its strongest improvement since March 2015.

Constant Rise in US Manufacturing PMI: Solid Business Climate

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The improvement was mainly due to the following:

  • Production output and volume rose strongly in January 2018 compared to December 2017. It was the highest improvement in production output since January 2017, mainly due to a continuous improvement in the US business condition.
  • Export orders and new order growth rose at a faster rate in January 2018.
  • Employment growth in the manufacturing sector improved at a higher rate in January 2018.

Stronger improvements in domestic demand and international demand are the main reasons for the boost in manufacturing activity in the United States. In January 2018, the investment sentiment was also optimistic. However, at the end of the month, the sentiment fell some, and concern about long-term economic growth increased. That hampered the performance of major indexes and ETFs at the end of the month.

Performances of ETFs in January 2018

The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500 Index (SPX-INDEX), rose 5.6% in January 2018. The PowerShares QQQ Trust, Series 1 (QQQ), which tracks the performance of the major US technology stocks (COMP-INDEX), rose 8.7% in January 2018.

In the next part of this series, we’ll analyze the performance of the France Manufacturing PMI for January 2018.

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