New figures published today by the Institute for Supply Management report that the manufacturing index for November has fallen to 48.1 points; down from 48.3 in October and a fourth consecutive month of sector contraction.
The immediate response was a gold price jump from $1,458 per ounce up to $1,464, with S&P 500 down 0.59%, Dow Jones down 0.38%, and the Nasdaq down 0.97%.
United States ISM was very poor in Manufacturing, Employment and New Orders, especially because the survey was already seen as conservative and beatable.— Daniel Lacalle (@dlacalle_IA) December 2, 2019
Markit Manufacturing PMI comes better than expected, though. pic.twitter.com/9LuUERfleF
Then came some contradictory data – this time from IHS Markit, the better known of the two index takers. Their report showed a rise in the PMI, as visible in the tweet below:
🇺🇸 U.S. manufacturers signalled a further pick-up in operating conditions as the PMI rose to 52.6 in November (Oct - 51.3), with rates of output and new order growth quickening. Job creation accelerated, but business confidence remained muted. More here: https://t.co/fgeXqN9zd4 pic.twitter.com/7ByePWqDmG— IHS Markit PMI™ (@IHSMarkitPMI) December 2, 2019
The difficulty for analysts and investors is now to work out who is right and who is wrong. IHS had October making slight growth, at 51.3 points on the index, and this supposedly rose in November to 52.6. In contrast, ISM report that new orders in the manufacturing sector were down last month – as were employment figures.
The financial blog ZeroHedge boiled it down to one of two things: either the financial difficulties and potential recession were a lie and part of ‘Project Fear’, or the United States is currently in the eye of the storm with regards the US/China trade war.
Regardless, the quick market reaction to buy into gold following the news shows that investors are ready and waiting to act and jump back onto the popular safe-haven asset.