S&P Global US March manufacturing PMI 58.8 vs. 58.5 previously


  • The preliminary was 58.5
  • Before was 57.3
  • Output 56.1 vs 56.5 prelim and 52.5 prior
  • Price 79.5 vs. 79.7 preliminary and 79.2 prior
  • Some companies have tied the rise in new orders to customer stockpiling amid sharp increases in selling prices
  • The growth rate in purchases was the highest since last September as companies seek to hedge against future price hikes

S&P Global purchased Markit last month, so all Markit PMIs are now known as “S&P Global”. This can be a little confusing as this is a US PMI, not a global one.

Chris Williamson, chief economist at S&P Global, said:

“Growth in the US manufacturing sector accelerated in March as strong demand and an improving outlook thwarted headwinds from soaring cost pressures and the Russian-Ukrainian war.

“Order backlog growth has accelerated as customers look to the continued reopening of domestic and global economies amid signs that the disruption caused by the pandemic continues to fade.

“While companies continued to report widespread production constraints due to supply chain bottlenecks, the incidence of these delays is now lower than at any time since January 2021. Growth in employment also improved as fewer companies reported labor shortages.” Similarly, although price pressures remain high, with soaring energy costs pushing costs business at a faster pace in March, inflation rates for input costs and average selling prices fell from highs recorded late last year to suggest that the consumer the price inflation

Inflation

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general price level where a given currency is effectively buying less than it has in previous periods. In terms of valuation of strength or currencies, and by extension foreign currencies, inflation or its measures are extremely influential. Inflation stems from the global creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured with GDP). This thus generates demand pressure on a supply that is not increasing at the same rate. The consumer price index then increases, generating inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies on several levels. This includes purchasing power parity, which attempts to compare the different purchasing power of each country based on the general level of prices. By doing so, it helps to determine the country with the most expensive cost of living. The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates in the forex market. Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on the exchange. Conversely, too low inflation (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the foreign exchange market.

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general price level where a given currency is effectively buying less than it has in previous periods. In terms of valuation of strength or currencies, and by extension foreign currencies, inflation or its measures are extremely influential. Inflation stems from the global creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured with GDP). This thus generates demand pressure on a supply that is not increasing at the same rate. The consumer price index then increases, generating inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies on several levels. This includes purchasing power parity, which attempts to compare the different purchasing power of each country based on the general level of prices. By doing so, it helps to determine the country with the most expensive cost of living. The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates in the forex market. Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on the exchange. Conversely, too low inflation (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the foreign exchange market.
Read this term could also peak soon.

“It was particularly encouraging to see business optimism for the year ahead improve further in March, despite new uncertainties, sanctions and geopolitical risks caused by the invasion of Ukraine, optimism producers now being the brightest since late 2020.”


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