Talking Points:
- ISM non-manufacturing hits 59.8 in September, beating 55.5 forecast
- Business activity subcomponent came in at 61.3 for the month compared to 57.5 in August
- The DXY Dollar Index rallied following the release to an intraday high at 93.56
- See the DailyFX Economic Calendar and DailyFX Webinar Calendar for event risk coverage like NFPs
See the newly updated fourth quarter forecasts for the US Dollar, Euro, British Pound and more the the DailyFX Trading Guides page.
TheInstitute for Supply Management (ISM) non-manufacturing survey hit a 12-year high in the month of September. The print came in well above the expected 55.5 figure at 59.8. In addition, business activity at 61.3 was up by 3.8 over the August print. With a focus on the Fed’s expected path to its next rate hike, the prices paid component also shot up to 66.3, the highest since February 2012.
As with the rest of the global economy’s pacing, the US has struggled to expand at the hearty clip that many lawmakers and central bankers have expected. Business activity has not struggled however with the both service and manufacturing measures holding well into positive territory. However, the emphasis for growth is skewed and uneven given underlying data. The ISM’s manufacturing report earlier this week printed a strong headline figure, but the components leading the charge were not the sources of sustainable growth. Meanwhile, non-manufacturing sector output accounts for nearly three-quarters of the US economy. That said, the prices paid figure in today’s report does add further weight to the 83 percent forecast for a hike from the Fed at the December 13th meeting.
The ISM’snon-manufacturing survey reflects business conditions generally for service sector components in the US. It includes key subcomponents, such as an inflation (‘prices paid’) and employment figure. These key components provide significant economic health indications considering they precede other important market data for the same month such as, non-farm payrolls and the consumer price index (CPI). The survey is comprised of more than 400 non-manufacturing firms' purchasing and supply executives, within 60 sectors across the nation. The headline figure is expressed as an index based on survey responses.
Below is a list of economic releases that has driven the US Dollar higher:
- USD ADP Employment Change (SEP): 135K in line with expectations, from 228K (revised lower from 237K)
- USD Markit US Services PMI (SEP F): 55.3 versus 55.1 expected, from 55.1 previous
- USD Markit US Composite PMI (SEP F): 54.8, from 54.6 previous
- USD ISM Services/Non-Manufacturing Composite (SEP): 59.8 versus 55.5 expected, from 55.3 previous
See the DailyFX economic calendar for Wednesday, October 4, 2017
Chart 1: DXY Index 15-minute Chart (October 4, 2017 Intraday)
The US Dollar Index got a much need bump following the release of the non-manufacturing data. DXY hit an intraday high at 93.56 before retraced back below 93.50. The US dollar fell yesterday after the release of the list of candidates for the next Fed Chair.
--- Written by Dylan Jusino, DailyFX Research
