THE TAKEAWAY: [Manufacturing activity in the U.S. continued to expand in May, albeit at a slower rate than the month before.] > [Inventories fall; broad-based gains in new orders] > [USDJPYgains]
Manufacturing activity in the U.S. continued to expand in May, albeit at a slower rate than the month before. Economic activity in the manufacturing sector has continued to grow since its last contraction in July 2009. A report released by the Institute for Supply Management (ISM) showed that its manufacturing index fell to 53.5 in May from 54.8 registered in April. A reading over 50.0 signals growth. The median forecast of 82 economists surveyed by Bloomberg News had projected a reading of 53.8.
Of the 18 manufacturing industries, 13 reported growth in May, with nonmetallic mineral products, furniture and apparel leading the way. New orders index rose to 60.1 in May from 58.2 while inventories fell to 46.0 from 48.5. The drop in inventories was behind the fall in the ISM index, while gains in new orders, which drive factory activity, were broad-based. ISM Chairman Bradley Holcomb remarked that the manufacturing report was positive overall and upward trends are likely to continue.
USDJPY 1-minute Chart: June 1, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
The greenback rose slightly against the Japanese yen in the minutes following data release. This follows on the back of a dramatic swing in the currency pair after a massive miss in NFP employment figures earlier this morning. At the time of this report, the USDJPY pair was trading at 78.16 yen.
--- Written by Tzu-Wen Chen, DailyFX Research