Purchasing Managers’ Indices (PMIs) are economic indicators derived from monthly surveys of purchasing and supply executives in private sector companies. They are diffusion indices, which means a reading of 50% represents no change from the previous period, while a reading under 50% implies respondents on average reported a deterioration. Their usefulness lay in being a leading indicator of GDP.
US manufacturing activity rebounded more than expected in August and the latest figure is very much at elevated levels. According to the Institute of Supply Management (ISM) August survey, its Purchasing Managers Index recorded a reading of 61.3, up from July’s reading of 58.1 and more than the expected figure of 59.2.
August’s figure is the highest in this cycle so far after readings of 60.8 recorded in September 2017 and February 2018 were exceeded and US bond yields across the curve finished the day higher. 2 year yields increased by 2bps to 2.65% and 10 year yields increased by 4bps to 2.90%.