ISM Manufacturing data contracts in November. US officially in recession. USD mixed in Forex Trading. | CountingPips Forex Blog

December 1, 2008 - Forex Economic News

ISM Manufacturing data contracts in November. US officially in recession. USD mixed in Forex Trading.

U.S. Manufacturing data, released today by the Institute for Supply Management, showed that manufacturing activity failed to grow in November for the fourth straight month and registered a 26-year low. November's ISM Report On Business index readings for economic activity were at 36.2 percent, a decline from October's 38.9 percent and below economic forecasts which were expecting a 37.0 percent reading. A score above 50 is considered to be USD mixed in Forex Trading growth and less than 50 is considered to be contraction in that sector. The November score is the lowest level of the index since May of 1982. The report also showed that the overall economy contracted for the 2nd straight month following 82 consecutive months of growth.

Norbert J. Ore, chair of the ISM Business Survey Committee, stated in the report that, "When comparing November to October, the PMI indicates a continuing rapid rate of contraction in manufacturing. New orders have contracted for 12 consecutive months, and are at the lowest level since June 1980 when the index registered 24.2 percent. Order backlogs have fallen to the lowest level since ISM began tracking the Backlog of Orders Index in January 1993. The Prices Index at 25.5 percent indicates that commodity prices continue to decline at a rapid rate. This is the lowest reading for the index since May 1949 when it registered 20.1 percent."

New orders for manufactured goods showed a 4.3 percent decline for the month of November while the prices index dropped by 11.5 for the month and marked its lowest level since 1949. New orders have now fallen for 12 straight months.

Production saw a decline of 2.6 percent for the month while employment decreased by 0.4 percent, inventories declined by 5.2 percent and imports fell by 3.5 percent. Customer's inventories and exports were the only sectors not showing declining levels as each showed no change from October.

National Bureau of Economic Research declares US recession.

The U.S. economy has been officially confirmed to be in a recession since December 2007 according to the National Bureau of Economic Research. The National Bureau of Economic Research or NBER is a private, nonprofit and nonpartisan economic group that determines the beginning and end of recessions. The group concluded that the recent peak of economic activity was in December of 2007 after starting in November 2001.

A recession is generally considered to be confirmed after two straight quarters of negative Gross Domestic Product growth but the NBER uses a broad range of declining economic indicators to declare a recession including GDP, employment, income and others. The NBER statement defined a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion."

Read the full NBER article and their methodology here.

US Dollar mixed in trading against most majors.

The U.S. dollar has been mixed in forex trading today against the major currencies. The dollar has gained against the euro, pound, aussie and kiwi while falling verses the Canadian dollar, yen and Swiss franc. The euro has fallen verses the dollar from today's 1.2681 opening to trading at approximately 1.2646 in the afternoon of the US trading session at 2:45pm ET.

The British pound has nose dived today verses the buck from 1.5337 to trading at 1.4872 after gaining against the dollar last week. The dollar has declined against the Japanese yen today as the USD/JPY has fallen from its 95.33 opening to trading at 93.32.

The dollar has fallen against the Canadian dollar after opening at 1.2434 earlier today to trading later at 1.2398 while also declining against the Swiss franc from 1.2128 to trading at 1.2031.

The New Zealand dollar has declined verses the US dollar after opening at 0.5421 today and the NZD/USD currently trades at 0.5349. The Australian dollar has also lost ground verse the USD as the AUD/USD trades at 0.6469 after opening today at 0.6480.

GBP/USD Chart - The British pound falling sharply vs. the US dollar in forex trading today(Daily Chart).

Today's Forex Chart

tags: ism manufacturing, recession, forex trading

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