Forex Trading – U.S. ISM Non-Manufacturing Beats Market Expectations in March
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The ISM non-manufacturing index increased to 55.4 in March, remaining in expansionary territory for the third consecutive month following readings of 53.0 and 50.5 in February. Market expectations going into today’s report were for a more modest rise to 53.6.
The ISM non-manufacturing index moved more firmly into expansionary territory in March, rising to 55.4 from 53.0 in February. The March level marks the highest reading for this index since May 2006. Business activity surged to 60.0 from 54.8 in February while new orders jumped up to 62.3 from 55.0 in the previous month. The employment index edged closer to expansionary territory, rising to 49.8 in March from 48.6 in February, its highest level since April 2008. With respect to inflationary pressures, prices paid climbed to 62.9 from 60.4 in February.
Today’s ISM non-manufacturing report follows suit of last Thursday’s ISM manufacturing report by placing the sector more solidly into expansionary territory in March. The strength in both reports is encouraging for the U.S. economy as a whole and provides some upside risk to our view that GDP growth moderated to a 2.5% annual rate in the first quarter of 2010 following the 5.6% inventory-driven surge in the final quarter of 2009. The improvement in today’s employment index follows the sizable jump in Friday’s payroll report and supports our view that labor markets continue to improve; however, the unemployment rate remains elevated and this economic slack will help keep inflationary pressures at bay in the near term, allowing monetary policy to remain highly accommodative until the economic recovery is more firmly established. We continue to expect the Fed Funds target to remain in its current stimulative 0% to 0.25% range into the fourth quarter of 2010.
RBC Financial Group
http://www.rbc.com
The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.
