Recent economic indicators, including the PMI report and employment data, indicate a weakening economic activity in the US. These metrics are crucial for understanding the current economic conditions and their potential impact on financial markets, including the cryptocurrency market.
US PMI Report
PMI reports offer feedback from purchasing managers about current economic conditions in specific sectors. In July, the finalized U.S. Manufacturing PMI came in lower than expected at 48 compared to an anticipated 49.5, signaling a decrease in new orders and shrinking inventories, marking the fifth consecutive month of contraction in the manufacturing sector.
Susan Spence, Chair of the Business Survey Committee, noted the 1-point decline in the Manufacturing PMI to 48 in July versus 49 in June.
US Employment Data
The recent Non-Farm Payroll report showed disappointing figures, with a modest increase of only 73,000 jobs for the month. A significant revision to the previous month dropped numbers from above 125,000 to just 14,000, negatively impacting stock futures and sharply lowering treasury yields.
This revision creates a peculiar scenario. With tariffs imposing inflationary pressures and the Fed opting to remain on the sidelines, employment concerns have intensified.
Comments from the Fed
Williamson from S&P flagged worsening conditions in the manufacturing sector. Meanwhile, Fed member Hammack remains calm, stating that the Fed faces more shortcomings on the inflation front than in employment. Fed member Bostic remarked on the recent employment data, indicating significant revisions and expectations for possible rate cuts this year.
Weak PMI and employment data indicate potential issues within the US economy. Investors should closely monitor these indicators as they may significantly affect financial markets and Fed policy in the future.
