- The S&P Global Flash PMI for August is anticipated to show slight declines from July figures.
- Investors are closely monitoring employment and inflation-related subindexes.
- The EUR/USD is trading in familiar ranges, lacking a distinct driver.
S&P Global is set to release the Flash Purchasing Managers’ Index (PMI) for the US this Thursday. This private sector survey serves as an early gauge of economic health in the business sector.
Leading up to the announcement, analysts project a decrease in the flash manufacturing PMI for August, dropping from 49.8 to around 49.5. The service index is expected to come in at 54.2, down from July’s 55.7. Consequently, the overall PMI is predicted to be around 53.
S&P Global distinguishes between manufacturing and service activities, reporting them separately via the PMIs and the service PMIs in production. The report also provides a weighted average of the two combined PMIs. Generally, readings above 50 signal expansion, while those below indicate contraction.
The report will have two iterations: a preliminary estimate and a final revised version released in about two weeks, alongside official figures. It’s worth noting that the report assesses various factors such as production and export trends, capacity utilization, employment, and inventory levels—offering early insights into economic direction.
The combined PMI for July was confirmed at 55.1, showing improvement from June’s 52.9. The services sector demonstrated growth, while manufacturing lingered in contraction, with the respective indexes at 55.7 and 49.8.
“In July, we observed a notable increase in US business activity, according to S&P Global PMI data. This growth marks the most robust we’ve seen this year. Still, it’s been uneven, primarily fueled by the tech and financial sectors, particularly concerning inflation,” commented Chief Business Economist Chris Williamson after the July data release.
What can we anticipate from the upcoming S&P Global PMI report?
The expected drop in the PMI for August is unlikely to greatly affect the dollar or financial markets. After all, a decline in manufacturing isn’t particularly surprising. However, significantly lower figures could negatively sway market sentiment. If the numbers disappoint, it might raise concerns about the US economy, increasing the likelihood of unexpected interest rate cuts before year-end. That being said, the circumstances would need to be quite dire for such a scenario to unfold.
Results that align with forecasts will emphasize the subindexes in the PMI report, especially those related to employment and output prices, as market players look for hints ahead of the Federal Reserve’s September monetary policy meeting.
Conversely, if the figures exceed expectations and breach the 50-mark, it could bolster demand for the US dollar, reflecting a robust economy without significantly influencing the odds of interest rate cuts at the September 25th meeting.
When will the August Flash US S&P Global PMI be released, and how might it impact EUR/USD?
The S&P Global Manufacturing, Services, and Combined PMI report is scheduled for release at 13:45 GMT, indicating that US business activities are anticipated to expand in August, albeit at a slower rate than the previous month.
Before the release, the US dollar is generally stable, showing a slight upward tilt but remains unaffected by external factors.
“The EUR/USD pair has been fluctuating within a limited range for about two weeks, finding support near the 1.1600 area and quickly reversing after reaching the 1.1700 level. Currently, it rests close to 1.1770,” shared Valeria Bednarik, Chief Analyst at FXSTREET.
She added, “The overall risk sentiment appears slightly skewed to the upside, but potential declines are still a concern. The weekly low, set at 1.1622, offers immediate support before the 1.1590 level seen on August 11th.”
