Manufacturing Survey

The Manufacturing Survey measures the amount of output in the manufacturing sector and gauges the overall health of the economy.

It is often called the PMI for Purchase Managers Index, which is a compilation of the data obtained from the Survey. Traders should use the PMI number provided.

The Manufacturing Survey is the first report released every month. It sets the tone for the Employment Report, which is released shortly later. It covers new orders, production, employment, supply deliveries, inventories, customer inventories, prices, and new export orders.

A figure above 50 means that manufacturing and the economy are expanding.

A figure between 43 and 50 means that manufacturing is contracting, but that the economy is still growing.

A figure below 43 means both manufacturing and the economy are contracting, which signals a recession.

The Manufacturing Survey is released on the first business day of the month at 10am ET.

The data released in this Survey will either increase demand for the US Dollar or decrease its demand. The Forex market is very sensitive to this report so movement is likely to occur.

Demand for the Dollar will increase with a figure above 50 and rising. This signals an expanding economy, which is a good investment for foreigners. A rising figure could also encourage the Federal Reserve Board to raise interest rates, which would make the Dollar a more attractive investment on a global scale.

Demand for the Dollar will decrease with a manufacturing figure below 43. A figure below 50 could also cause investors to sell their Dollar-linked securities. These scenarios would place downward pressure on the price and value of the Dollar against other major currencies.

Manufacturing may sound boring, but it is a great assessment of the economy. Traders and investors around the world recognize this fact and will respond to any minute changes in the manufacturing figure. However, unlike the Employment Report, the Manufacturing Survey does not cause knee-jerk, highly emotional responses, and unpredictable price swings. It provides a good way to put your finger on the pulse of the economy, which is helpful for both fundamental and technical traders. Keeping a graph of this report’s monthly changes can provide a bird’s eye view of the US economy’s health and growth.