US Non-Manufacturing Activity Rises 2012.03.06

The Institute for Supply Management reported Monday United States (US) economic activity in the non-manufacturing sector rose 0.5% points to 57.3% in February from January’s 56.8% figure. Also, February’s business activity gained 3.1% points to 62.6% after January came in at 59.5%. Additionally, the index for new orders increased 1.8% points in the month to 61.2%. Furthermore, the employment index lost 1.7% points settling at 55.7%. Generally, an index figure higher than 50 indicates growth whereas an index figure less than 50 indicates contraction. Thus, indices for business activity, new orders as well as employment all exhibited growth although unemployment growth lowered in the month.

To add to this, the price index appreciated 4.9% points in February to 68.4% showing that prices increased faster during the month than in January. Respondents point out there is concern for inflation as well as increasing fuel prices. Despite this, a large proportion of respondents’ comments exhibit increasing optimism over business conditions and the overall economy.

In other news, The US Commerce Department released the January 2012 Manufacturers’ Shipments, Inventories, and Orders report. orders came in at $462.6 billion, 1.0% ($4.8 billion) less compared to the previous month. Removing transportation orders all others resulted in only a 0.3% decline. On the other hand, shipments increased 0.9% ($4.1 billion) to $463.3 billion.

The EURUSD traded in a narrow range today as markets prepare for the European Central Bank rate decision and the U.S. Non-Farm Payrolls report on Friday. We see the EURUSD falling as low as 1.3000 on positive U.S. news and the EURUSD rising to 1.3500 on positive news from Europe. ECB President Trichet’s press conference is expected to shed further light on the effects of the LTRO held last week. Markets are expecting the U.S. to have created at least 208K jobs in the month of February.

 Eugene Ross, Analyst

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