- AIG Performance of Manufacturing Index
- SVME Purchasing Managers Index
- U.K. PMI Manufacturing Survey
- U.S. ISM Manufacturing Survey
Australian Industry Group PMI (JAN)(22:30 GMT, 17:30 EST)
Consensus: N/A
Previous: 51.6
Outlook: Previous jumps in the AiG PMI suggest that manufacturing strength will continue into 2006. The survey, which measures sectoral growth, leapt to a positive reading in December after flirting with 5-year lows of 43.3 in November. With a reported sharp gain in new orders, the results suggest that the figure should stay in positive territory through January. Moving forward, however, some Australian officials have said that national manufacturing will be hard-pressed for long-term growth with increased competition from China. Senior Australian Treasury official Dr. Martin Parkinson said that the, â,"gradual global shift of manufacturing production to low-cost countries, including Chinaâ,, will continue to place competitive pressures on Australian manufacturing. Time will tell if Australian firms can withstand such pressures and continue growth seen in 2005; the headline figure posted gains in 9 of 12 months last year.
Previous: Australiaâ,"s manufacturing industry index gained for the first time in three months, as orders increased for food, beverages, and furniture. The reading climbed 8.9 points to 53.1 in December, above the neutral figure of 50. Heather Ridout, CEO of the industry group, said, â,"New orders jumped sharply on the month, [and] manufacturing experienced moderate growth in December to end the year in positive territory.â, The surveyâ,"s strong reading provides bullish expectations for future national manufacturing expansion. Time will tell, however, if this positive reading is simply an aberration as it was in September 2005. Similar to the U.S. ISM manufacturing survey, the Australian Industry Group PMI surveys 215 companies about production, new orders, employment, inventories, and deliveries.
SVME Purchasing Managersâ," Index (JAN) (5:30 GMT, 0:30 EST)
Consensus: 57.4
Previous: 56.9
Outlook: In January, Switzerlandâ,"s SVME Purchasing Managersâ," Index is expected to take a jump to 57.4, up from Decemberâ,"s reading of 56.9. The reading above 50 indicates expansion, and is significantly higher than the nationâ,"s average of 53. Economists are predicting the expansion in manufacturing to continue for several months as Switzerlandâ,"s export levels have recently touched their highs in the end of 2005. In addition to other economic factors, the Swiss National Bank will be keeping an eye on industrial output levels in formulating rationale to raise interest rates later in the year. If industrial expansion continues at its current rate, Swiss GDP may increase as much as 2 percent this year and spur the Switzerlandâ,"s central bank to increase rates on multiple occasions.
Previous: Manufacturing took a fall in December as the Swiss Purchasing Managersâ," Index declined from a reading of 57.8 to 56.9. Of the 8 sub-indices that make up the larger index, 6 showed losses in areas including quantity of purchases, order backlogs, supplier delivery, stocks of purchases, stocks of finished goods, and employment. However, the index also showed increases in purchasing prices and most importantly the level of manufacturing output. With rising prices and higher output, evident growth in Switzerlandâ,"s industrial sector, the expansion should fuel growth in the rest of the countryâ,"s export-driven economy.
UK Manufacturing Purchasing Managersâ," Index (JAN) (9:30 GMT, 4:30 EST)
Consensus: 51.3
Previous: 51.1
Outlook: Industrial growth in the U.K. as measured by the Purchasing Managersâ," Index (PMI) is slated for an expansion in January. This will be the sixth straight month of industrial growth in the nation as companies are receiving more orders and are improving their productivity. Such expansion in the manufacturing sector coupled with increased consumer consumption could deliver the U.K. the sort of economic growth it has not seen for several quarters. The Bank of England, however, has yet to show a great deal of optimism resulting from the recent gains in manufacturing as the central bank is still weary of impediments to manufacturing growth that may hinder overall economic growth in the coming year. Relying on interest rate futures trading as an indication of investor sentiment, many feel a rate reduction is imminent towards the middle of the year.
Previous: The United Kingdomâ,"s December PMI showed a gain of 0.1 index points from 51.0 in November. Of the 9 sub-indices that make up the larger index, 3 posted declines including losses in the number of export orders, backlog of work, and overall output. In spite of the short fall in overall output, however, the December gain contributes to a much rosier picture of Englandâ,"s industrial sector in comparison to the first half of 2005. Manufacturing fell into a recession in the former half of the year. Consumer demand in the third quarter, however, gave the sector a boost as evidenced by PMI readings consistently above 50 in the third and fourth quarters. Although input prices increased in December, managers were able to maintain higher levels of inventory and employment due to increased output prices and gains in new orders.
U.S. ISM Manufacturing (JAN)(15:00 GMT, 10:00 EST)
Consensus: 55.8
Previous: 55.6
Outlook: After dipping to a revised reading of 55.6 in December, economists predict that the U.S. ISM Manufacturing survey will remain relatively unchanged at 55.8. After two consecutive monthly declines, it seems that manufacturing growth has leveled off at a more sustainable pace. Following Hurricane Katrina, a rebound in construction and inventories pushed the September surveyâ,"s reading to its highest levels since December 2004. A subsequent retracement, however, suggests that such high growth was a result of producing above capacity. Markets will watch tomorrowâ,"s data closely to gauge the future direction of U.S. manufacturing in 2006. While manufacturing comprises a relatively small share of all U.S. economic activity, sectoral strength would likely spur revitalization in employment growth.
Previous: The U.S. ISM Manufacturing survey reading inched lower for the second-consecutive month in December, as national manufacturing cooled following a sharp rebound after Hurricane Katrina. The reading initially dropped 3.1 points to 54.2, but a later revision put the headline number at a more robust 55.6. The survey points to the fact that manufacturing was seemingly growing at an unsustainable pace following restocking and reconstruction after Hurricane Katrinaâ,"s widespread destruction. Despite the expected slowdown from robust fourth quarter growth, however, some economists claim that overall growth will persist.
Richard Lee is a Currency Strategist at FXCM.
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