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Tuesday, April 5, 2011

Gold and Silver Spikes on Weak ISM NMI

March's ISM Non-Manufacturing Index came in weaker than expected.  The ISM (Institute for Supply Management) NMI (Non-Manufacturing Index) measures the level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry. This is a survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. It is considered to be a leading indicator of economic health for multiple reasons; if prices are seen rising then sooner or later that will be passed on to the consumer reducing available dollars, it is also a snapshot of employment, indicator or new orders in the pipeline and etc.  The forecast called for an index of 59.8, but the actual headline number came in at 57.3 leading some to believe that the likelihood of QE3 is more assured.  You can see by the chart below gold (and silver) shot up at starting at 10am (same time the ISM NMI was released).  Ref article from Business Insider here.
Courtesy of

ISM NMI part 1 shows indicators that should be rising.  Businesses are very concerned about rising fuel costs and rising commodities.   Business activity, exports and employment were down in the index for the month of March.

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