Pace of growth of the UK manufacturing sector slowed in June

A measure of activity in the UK manufacturing sector was released yesterday and showed that the pace of growth in June had slowed as manufacturing PMI fell by 0.5 points to 57.5 in June, down from May's fifteen and a half year high. A reading above 50 means the majority of managers saw a rise in activity while a figure below 50 shows a fall in activity.

The UK manufacturing PMI mirrored the Eurozone PMI which was also down slighly in June at 55.6 from 55.8 in May, continuing it's steady decline over the last four months as consumer demand remained subdued.

In the US, ISM manufacturing was a bit of a shocker as it suggests that momentum in the manufacturing sector is fading rapidly. The actual figure was 56.2 in June, a six month low, down from 59.7 in May and below expectations for 59.0.

The initial jobless claims number were also worse week on week as 472,000 people claimed benefits last week, up 13,000 from the week before.

Should US non-farm payrolls reflect the rapid decline in the ISM manufacturing figure and poor initial claims number, only a few months after the US economy had begun to create jobs, the outlook would weaken qucikly and put pressure on the monetary authorities to act.

There is a busy data calendar today featuring UK PMI construction, unemployment and producer prices from the Eurozone and US factory orders. This will affect buying US Dollars as well as selling Euros.

It is however US non-farm payrolls that dominates todays data calendar. A combination of quarter end, a long holiday weekend in the US will make today's market thinner and therefore give the non-farms the potential to be a big market mover.