Whilst our post of yesterday morning highlighted the significant role that the ISM Non Manufacturing figure plays in determining the state of the US Economy, the figure that was eventually released in the afternoon came as a shock to many. With analysts having expected the figure to reveal a small rise in the index; from 57.3 in March to 57.4 in April; the actual figure was considerably worse at 52.8. Whilst the services sector is showing continued growth, declines of almost 5% will invariably prove alarming reading.
Whilst Business Activity, Prices Paid and the Employment Index all recorded their own declines; these being 6% to 53.7%; 2% to 70.1%; and 1.8% to 51.9% respectively; New Orders saw the sharpest losses having posted declines of 11.4% to 52.7%. As mentioned above; alarming reading. Further; with jobless claims having risen to 429,000 in the most recent Jobless Claims report; there will invariably be those out there that will be concerned as to what tomorrow’s Non Farm Payroll data might reveal. At the same time, strong PMI Manufacturing, Retail Sales and Industrial Production figures imply that the there is still strength in the US Economy.
Whilst not positive, there is a good chance that these figures imply a deceleration in growth, rather than a return to contraction. Tomorrow’s NFP data should be able to provide a degree of confirmation as to whether this truly is the case though.
Stay alert.
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