ISM Non-Manufacturing PMI Beats With 54.5 – USD Extends Gains

The US services sector is doing better than expected: the ISM PMI shows a score of 54.5 points. Among the components, the employment sector returns to expansionary territory with 50.3 points, new orders are up to 56.7 and prices paid are up to 49.1 points. So, prices are still falling, but at a slower pace. The US JOLTS job openings missed with 5.445 but the previous figure was revised to the upside with 5.604. More importantly, the quits rate has edged up to 2.1% and the number is 3 million – another sign of gradual improvement in confidence. 

The US dollar extends its gains as most data pieces are above expectations and show that employment and inflation are on the right course. More quits mean more confidence and moving to higher paying jobs. A stronger services sector is of course welcome news.

Currency reaction

The US ISM Non-Manufacturing PMI was expected to rise from 53.4 points in February to 54 points. At the same time, the US released the JOLTs job openings publication, which was predicted to rise from 5.541 million to 5.55 million in February. Despite being a lagging indicator, the number is watched by the Fed and seen as a broad measure of employment.

The US dollar was attempting a recovery amid a worsening market mood.

Earlier, Markit’s final services PMI showed a score of 51.3 points, slightly above the 51 points initially published. ISM carries more weight in the US.

This survey is usually published ahead of the Non-Farm Payrolls report and provides a hint to the outcome. This time, we already have the data. Nevertheless, it is a forward looking indicator for the largest sector in the world’s No. 1 economy.

The US economy gained 215K jobs in March, slightly better than expected. In addition, wages advanced 2.3% y/y, also better than expected. The ISM Manufacturing PMI went back to positive ground, but that release was easily overshadowed by the NFP released only 90 minutes earlier.