Market Review: December 16, 2024
Diverging Manufacturing and Services Trends Reflect Mixed Economic Signals in December
Economic data from December 16 reveals contrasting dynamics between manufacturing and services. Manufacturing activity continued to weaken, with both the NY Empire State Manufacturing Index and S&P Global US Manufacturing PMI signaling contraction. In contrast, the services sector showed robust growth, with the S&P Global Services PMI surging to 58.5, driving the Composite PMI to a strong 56.6. These mixed signals highlight resilience in consumer-driven sectors alongside challenges in industrial activity.
Key Highlights:
- Manufacturing Data:
- The NY Empire State Manufacturing Index fell sharply to 0.2, reflecting a steep slowdown in regional manufacturing.
- The S&P Global US Manufacturing PMI declined further into contraction territory at 48.3, indicating ongoing weakness in the sector.
- Services and Composite PMI:
- The S&P Global Services PMI surged to 58.5, significantly exceeding expectations, reflecting strong growth in the services sector.
- The Composite PMI rose to 56.6, indicating robust overall economic activity driven by services strength.
Impact Analysis:
- USD Impact:
The strength in services and overall economic activity supports USD, offsetting weakness in manufacturing. The overall USD impact is neutral to slightly bullish.
- Gold Impact:
Gold benefits from weak manufacturing data, which reflects economic uncertainty, but faces bearish pressure from strong services growth and improved Composite PMI. The overall gold outlook is neutral to slightly bearish.
- Equities Futures Impact:
Equities are likely to react positively to strong services data and robust overall economic activity, while manufacturing weakness may weigh on industrial sectors. The overall equities outlook is bullish, with growth-sensitive sectors leading gains.
Today’s data highlights a bifurcated economic landscape, with the services sector driving growth while manufacturing faces continued challenges. Markets will likely focus on the resilience of consumer-driven industries and the implications for monetary policy amid these mixed signals.
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