SM Manufacturing PMI Preview: US Factory Activity Expected to Remain in Expansion Territory

Market attention turns to the release of the June ISM Manufacturing PMI at 14:00 GMT on Wednesday, one of the most closely watched indicators of US manufacturing activity. Economists expect the headline index to remain at 54.0, matching May's reading. If confirmed, the index would remain above the 50.0 level for a sixth consecutive month, a threshold that generally separates expansion from contraction.

May's report showed manufacturing activity remained resilient. The New Orders Index increased to 56.8, indicating continued demand, while the Prices Paid Index eased to 82.1 from 84.5, suggesting price pressures moderated compared with the previous month. The Employment Index improved to 48.6 from 46.4 but remained below the 50.0 level, indicating employment activity in the manufacturing sector continued to contract.

In addition to the headline figure, market participants will monitor the New Orders, Prices Paid and Employment sub-indices for further insight into manufacturing conditions. A stronger-than-expected report could reinforce expectations that the US economy remains resilient, while a weaker reading may raise questions about the pace of industrial activity. The market reaction will also depend on how the data influences expectations for Federal Reserve policy.

EUR/USD remained under close observation ahead of the release, with investors monitoring both economic data and key technical levels for additional direction.1