Summary:

• ISM non-manufacturing PMI 57.4 vs 59.2 expected
• Manufacturing ISM also missed forecasts for November  
• Despite softer than expected print Gold hits weekly lows below 1270

For the second time today an update on the services sector has come in below forecasts, with the US ISM non-manufacturing PMI following the lead of its UK equivalent in missing expectations. 

The ISM reading of 57.4 for the month of November was below the prior reading of 60.1 and the pace of growth was also below analysts’ expectations for a print of 59. With the services sector making up around 80% of US GDP today’s reading is a disappointment and reinforces the ISM manufacturing figure for last month which also missed expectations. 

 

 After a strong run up for much of the past 2 years, the latest figures have shown something of a pullback. Source: XTB Macrobond

Despite the disappointment in these latest ISM numbers it should be noted that the readings still signal a strong level of expansion -with the 50 line marking the level between expansion and contraction. Looking back over a longer time period this becomes even more clear.

 The current levels of both ISM metrics are near their post-crisis peaks. Source: XTB Macrobond

In terms of market reaction there was a little initial weakness in the US dollar and upside in Gold when the number was first released, but this has since been reversed. Gold in particular is at an interesting level and the precious metal has fallen towards its lowest levels in 4 months. Price gapped lower over the weekend and whereas other markets such as the US500 have since filled the gap, it remains unfilled for Gold. 1267 has previously been a fairly strong support level on a daily closing basis and should the market end today below here then it could represent a big breakout and pave the way for significant declines towards 1205. 

 Gold is attempting to break below prior support at 1267. A clean break and close below here could pave the way for further declines. Source: xStation