The hope-strewn bounce in Services PMI over the last 3 months (despite collapsing macro data) has ended. Markit Services PMI dropped in April to 57.4, weakening notably from preliminary expectations of 57.8. Markit remains convinced that their survey implies 3% GDP growth and all is well in the world. ISM Services however smashed expectations, printing 57.8 vs 56.2, its highest since November - despite a plunge in new export orders into contraction.
The bounce is over...
Markit remains very upbeat though...
“Together with the expansion signalled by the manufacturing survey, the service sector PMI so far points to the economy growing at an annualized rate of 3% in the second quarter, representing a nice rebound from the first quarter’s soft-patch.“Hiring has also remained resilient, boding well for monthly non-farm payroll growth to return above 200,000.“Price pressures have also ticked higher, suggesting we may see some further upwards pressure on core inflation in coming months."
Or Is It? ISM Services...
And the breakdown:
The cherry-picked respondents remain optimistic as ever:
- "Avian Influenza is causing concerns, but has not directly impacted our operations." (Agriculture, Forestry, Fishing & Hunting)
- "Clients in oil refinery sector have reduced their capital spending due to declining oil prices." (Professional, Scientific & Technical Services)
- "Definite signs of economic growth in most markets serviced. New construction and capital spending apparent." (Finance & Insurance)
- "Still have backorders/shortages of IV solutions." (Health Care & Social Assistance)
- "Pork prices are lower due to abatement of the PEDv virus. Chicken and beef prices are up due to higher demand and output. Corn prices and oil for gasoline have been the bright spot keeping prices from taking off higher." (Accommodation & Food Services)
- "Overall we see positive trends; spending has improved." (Retail Trade)
- "Low fuel prices continue to have a positive impact." (Transportation & Warehousing)
- "Business remains strong for this time of year and looks good for the next 12-18 months." (Wholesale
As New Export Orders Collapse into contraction