The ISM non-manufacturing (aka ISM Services) index continues its growth cycle,and improved 1.1 to 57.6 (above 50 signals expansion). Important internals were mixed. Markit PMI Services Index declined but remains in expansion.

Analyst Opinion of the ISM and Markit Services Survey

One survey slightly up and one slightly down – but both are in expansion. I am not a fan of surveys.

This was above expectations (from Bloomberg / Econoday) of 55.5 to 59.0 (consensus 56.5).

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For comparison, the Market PMI Services Index was released earlier – and declined from 55.6 to 53.8. From Markit:

Growth of service sector output dips to five-month low

  • Rates of expansion in activity and new work ease from January peaks
  • Outstanding business falls for first time in three months
  • Relatively muted price pressures signalled
  • February data pointed to a slowdown in U.S. service sector growth. Rates of expansion in activity, new work and employment all eased. Meanwhile, volumes of work-in-hand were depleted for the first time since November last year. Sentiment regarding the year ahead also weakened, despite remaining upbeat overall. On the price front, both input costs and output charges increased at slower rates.
  • The seasonally adjusted Markit U.S. Services Business Activity Index dropped from January’s 14-month high of 55.6 to 53.8 in February. Though still signalling a solid expansion of service sector output, the latest reading was the lowest in five months and below the long-run series average (55.3). Panellists nevertheless indicated that activity had been bolstered by new contract wins and the launch of new products.

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There are two sub-indexes in the NMI which have good correlations to the economy – the Business Activity Index and the New Orders Index – both have good track records in spotting an incipient recession – both remaining in territories associated with expansion.

This index and its associated sub-indices are fairly volatile.

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