Market Wrap – US dollar fades on soft manufacturing and jobs numbers

The US dollar currency gave back of its early week gains after the latest ISM reading and JOLTS job opening figures both came in weaker than markets had been expecting.

The ISM Manufacturing PMI for the US fell for a second consecutive month to 48.4 in December of 2022 from 49 in November, slightly below forecasts of 48.5.

The reading pointed to the second month of contraction in factory activity and the biggest decline since May of 2020 at the height of the covid pandemic.

Further contractions were recorded for new orders (45.2 vs 47.2), and new export orders (46.2 vs 48.4) while production also declined (48.5 vs 51.5). On the other hand, employment rebounded (51.4 vs 48.4), with many companies confirming that they are continuing to manage head counts through a combination of hiring freezes, employee attrition and layoffs.

Also, inventories grew faster (51.8 vs 50.9), and price pressures eased (39.4, the lowest reading since April 2020 vs 43). The month-over-month performance of supplier deliveries (45.1 vs 47.2) was the best since March 2009. Only two manufacturing industries reported growth in December: Primary Metals; and Petroleum & Coal Products.

The number of job openings in the United States decreased slightly by 54,000 to 10.5 million in November of 2022, compared with market expectations of 10 million, suggesting the labour market remains strong.

Job postings have slowly receded since hitting a peak of 11.9 million in March of 2022. Over the month, the number of job openings fell in finance and insurance (-75,000) and in federal government (-44,000) but increased in professional and business services (+212,000) and in nondurable goods manufacturing (+39,000).

Elsewhere, the number of hires was down by 56,000 to 6.1 million, while total separations including quits, layoffs and discharges, and other separations rose by 114,000 to 5.9 million.

The market is now in limbo ahead of the release of the FOMC meeting minutes from the December Federal Reserve policy decision. After this the next headline event is the Non-farm payrolls report on Friday.