US: PMI Services Index

Wed Apr 04 08:45:00 CDT 2018

Consensus Consensus Range Actual Previous
Level 54.1 54.0 to 54.9 54.0 55.9

New orders remain strong but did ease in March, pulling down the services PMI to 54.0 for the month's final reading vs 54.1 at mid-month and noticeably lower than February's 55.9. But orders aside, output remained strong and hiring did accelerate in the month for the best showing since August last year. Prices, as in other anecdotal surveys, are accelerating with higher input costs increasingly being passed through to customers. Watch later this morning at 10:00 a.m. for the ISM's non-manufacturing report where readings have been running higher than this report.

Market Consensus Before Announcement
PMI services moved lower in the flash for March and are expected to hold at the 54.1 result for the final reading. Despite the slowing, orders and employment were strong with price pressures also evident.

US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.

Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.

The Markit PMI Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.