US manufacturing PMI may fall, but do the markets really care?
Next Friday, March 24, the prelim reading of US Manufacturing PMI will be released for March, as a continuation of the shocking state in the global economy, it is expected that we will witness further decline in the index reading. But to be more realistic, in the current circumstances, who cares?
The focus of the markets and investors around the world is now mainly on every news related mainly to Covid-19 virus. Tell me about the number of newly discovered cases, tell me about prevalence rates and outbreak areas, but do not talk to me about economic indicators now. naturally the markets will return to these traditional indicators later when the storm subsides.
The month of March recorded the largest acceleration in the outbreak of COVID-19 across the United States until now, to the extent that the US administration declared New York State a disaster area, in addition to the increasing cases in each state. And we are witnessing every day new developments in the situation constantly regarding government procedures and policies that clearly indicate to what extent that the performance of companies in such times is unstable.
In addition to the consumer confidence survey data, the release of the "Initial" PMI for March is expected to indicate the performance of the industrial sector and will provide insight into the extent and depth of the turmoil.
If we look at the services sector, which already showed signs of turmoil in February after the decrease in demand for services related to tourism in particular. Closures across Europe that have spilled over into the United States and the travel ban may exacerbate difficult demand conditions across both the manufacturing and services sectors in March, with many closing their doors and asking employees to work from home wherever possible.
Accordingly, it is expected that the index reading will witness a decline, but according to the depth and severity of these declines, the reaction of the markets will differ.
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