Editor’s Note: updating earlier story to include more details from report, economist comment and updated gold price.
(Kitco News) – Gold prices remained stronger Monday after the Institute for Supply Management said that its headline manufacturing index dipped to 50.1% in February from 50.9% in January.
Spot gold was last up $13.70 to $1,599.20 an ounce, not far from where it was trading ahead of the report.
Consensus estimates compiled by news organizations called for the Purchasing Managers Index to be somewhere around 50.5% to 50.8%.
“The new [coronavirus] contagion is bound to show up in manufacturing activity, but our guess that the ISM would plunge today was probably a month too soon, as it depended heavily on when people filled into the survey,” said a research note from CIBC Economics.
While the 50.1% reading was below the consensus estimates, “we have little doubt that we will see a further decline in March,” CIBC said.
The ISM’s index for new orders came in at 49.8%, a decrease of 2.2 percentage points from the January reading. The production index was 50.3%, down 4 percentage points from the prior month.
The ISM reported that the employment index registered 46.9%, an increase of 0.3 percentage point from January. The index for supplier deliveries was 57.3%, up 4.4 percentage points from the January reading. The index for prices was 45.9%, down 7.4 percentage points.
Readings above 50% in such diffusion indexes are seen as a sign of economic growth, and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.
Timothy R. Fiore, chair of the ISM business survey committee, said sentiment was “cautious” compared to January. “The PMI remained in expansion territory, but at a weak level,” he added.
