donderdag 6 juli 2017

Services Economy Rebounds But Stagflation Looms As Inventories Spike

Following the shizophrenic picture of Manufacturing in 'Murica that we got earlier in the week, this morning's Services surveys show a modest and consistent rise for Markit's PMI (strongest since January with input prices soaring at the fastest pace in 2 years, and new orders at 5-month highs), and ISM's (employment down as new orders rise).
#  A reminder of the divergence between ISM and Markit's view of Manufacturing...


But both Markit and ISM saw modest gains in the Services sector...


# ISM Breakdown shows weakness in employment as new orders rise. Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: "The final PMI numbers came in higher than the initial flash reading and provide news of a welcome uptick in the pace of growth in the vast services economy at the end of the second quarter. Services data follow news from the sister manufacturing survey showing steady but unspectacular growth in US factories. Looking at the combined performance of manufacturing and services, output, order books and employment all gained momentum in June, and average prices charged for goods and services rose at the fastest rate for nearly three years".
# Markit's data suggests a modest pick up in GDP. Markit's data suggests a modest pick up in GDP. “However, the average all-sector PMI reading for the second quarter is down slightly on the first quarter, suggesting that the underlying pace of economic growth remains somewhat subdued though still robust. The surveys are historically consistent with annualised GDP growth of just over 2%. Actual GDP data are expected to show a stronger rebound, though largely reflecting volatile quarterly seasonal variations in the official data”...