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Tag: Services Sector Figures

  • U.S. economy growing only at a subdued rate in early November, S&P Global says

    U.S. economy growing only at a subdued rate in early November, S&P Global says

    The numbers: The U.S. economy expanded but at a relatively subdued pace in early November, latest data from S&P Global show.

    The S&P Global “flash” U.S. services index rose to 50.8 in November from 50.6 in the prior month, the highest level in four months. Economists surveyed by the Wall Street Journal had forecast a reading of 50.2.

    On the…

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  • U.S. economy running close to 2% growth rate in second quarter, S&P says

    U.S. economy running close to 2% growth rate in second quarter, S&P says

    This version corrects the manufacturing PMI data which fell to a six-month low of 46.3 in June from 48.4 in the prior month.

    The numbers: The S&P Global “flash” U.S. service sector activity index fell to a 54.1 in June from 54.9 in the prior month, a two-month low. 

    Economists surveyed by the Wall Street Journal has forecast a reading of 53.3.

    The S&P Global “flash” U.S. manufacturing sector index, meanwhile, slid to a six-month low of 46.3 from 48.4 in May. Economists had expected a 49 reading. 

    Readings above 50 signifies expansion; below that, contraction.

    Key details: In the services sector, new orders increased at a strong rate in June. The pace of expansion was close to May’s 13-month high.

    On the other hand, manufacturers recorded the fastest rate of contraction in new orders since last December. They linked the drop to muted consumer confidence. Foreign client demand was also subdued.

    Inflation was seen as moderating. The overall rate of selling prices for goods and services dropped to the lowest level since late 2020.

    Big picture: The S&P PMIs try to look ahead at the health of the economy, a critical question with even Federal Reserve officials saying that the outlook for the U.S. is hidden in a fog.

    A composite output index from S&P showed the fifth straight month of increases in private sector activity.

    What S&P Global said: “The overall rate of expansion of business activity in the
    US remained robust in June, consistent with GDP rising at a rate of 1.7% to put second quarter growth in the region of 2%,” said Chris Williamson, chief business economist at S&P Global.

    Market reaction: Stocks
    DJIA,
    -0.65%

    SPX,
    -0.77%
    opened lower on Friday on talk of more interest rate hikes from global central banks. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.741%
    fell to 3.72%.

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  • UK Economy Rebounded in April on Service-Sector Boost

    UK Economy Rebounded in April on Service-Sector Boost

    The U.K. economy grew in April, boosted by the services sector, though resilient high inflation and Bank of England interest-rate rises could put a lid on an uplift through the year.

    The country’s gross domestic product grew 0.2% on month in April, from a decline of 0.3% in March, data from the Office for National Statistics showed Wednesday.

    This…

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  • U.S. economy improved in early April, S&P Global says

    U.S. economy improved in early April, S&P Global says

    The numbers: An early reading of the U.S. economy in April from S&P Global showed that business activity has escaped the doldrums after struggling over the fall and winter months.

    The S&P Global U.S. service sector purchasing managers index rose to 53.7 in April from 52.6 in the prior month. This is a 12-month high.

    The flash U.S. manufacturing…

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  • S&P 500, Nasdaq post worst day in month after strong data fuels worry about Fed rate hikes

    S&P 500, Nasdaq post worst day in month after strong data fuels worry about Fed rate hikes

    The S&P 500 and Nasdaq Composite indexes recorded their worst day in almost a month on Monday, after a hotter-than-expected U.S. services-sector reading fueled concerns that the Federal Reserve may need to be even more aggressive in its inflation battle.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -0.26%
      finished down 482.78 points, or 1.4%, at 33,947.10.

    • The S&P 500
      SPX,
      -1.79%
      ended 72.86 points lower, or 1.8%, at 3,998.84.

    • The Nasdaq Composite
      COMP,
      -11.01%
      closed down 221.56 points, or 1.9%, at 11,239.94.

    • Those were the largest declines for the S&P 500 and Nasdaq Composite since Nov. 9, according to Dow Jones Market Data.

    Stocks finished mixed on Friday, although they clinched gains last week, following a robust November jobs report, which stoked fears that inflation might not be so easily defeated.

    What drove markets

    Strong wage growth numbers released Friday were followed up on Monday by a robust reading for the U.S. services sector — both of which helped to stoke fears that the Fed’s interest-rate hikes, along with the central bank’s modest balance-sheet unwind, haven’t had much of an impact on the tight labor market.

    The ISM barometer of U.S. business conditions in the service sector came in stronger than expected, rising to 56.5% in November, a healthy showing that signals the U.S. economy is still expanding at a steady pace.

    “If nothing else, the ISM services report is being interpreted as very strong, and thus the economy is overheating and that means more Fed tightening,” said Will Compernolle, a senior economist at FHN Financial in New York. “Consumer resilience has proven to be more intense than I would have expected. In the two most interest-rate sensitive sectors — housing and autos — tightening has channeled into markets in meaningful ways.”

    But there has been so much pent-up demand, that higher interest rates haven’t been cooling overall spending as much as the Fed would like because companies are still having to fill a backlog of orders, he said via phone.

    In other economic data, the final November S&P Global U.S. services PMI edged up to 46.2 from 46.1, but remained in contractionary territory.

    November jobs data released on Friday showed average hourly wages grew over the past year by more than 5% as of November, beating economists’ expectations and stoking concerns that robust wage growth would continue to fuel inflation, market strategists said.

    Worries about a more-aggressive Fed also helped to drive Treasury yields higher, adding to the pressure on stocks. The yield on the 10-year note rose 9.6 basis points to 3.6% on Monday. Treasury yields move inversely to prices, and yields had fallen sharply over the past month, driven by shifting expectations about the pace of Fed rate hikes.

    Monday’s ISM services figure “surprised to the upside, suggesting that the economy is still running above its long-run sustainable path and that the Fed is going to have to slow the economy more than expected in 2023,” Bill Adams, the Dallas-based chief economist for Comerica Inc. CMA, said via phone.

    In other markets news, signs that China’s government is easing its COVID restrictions helped Hong Kong’s Hang Seng Index
    HSI,
    +4.51%
    finish with a 4.5% gain.

    See also: Chinese ADRs and casino operators rally on signs of easing COVID

    Meanwhile, oil futures ended lower on Monday, a day after Sunday’s decision by OPEC and its allies to keep production quotas unchanged.

    Falling equity prices helped drive the CBOE Volatility Index
    VIX,
    +8.87%    ,
    also known as the VIX, back above 20 on Monday. The volatility gauge had fallen sharply in recent weeks as stocks rallied, potentially signaling complacency that could ultimately hurt stocks, said Jonathan Krinsky, chief market technician at BTIG, in a note to clients.

    Companies in focus

    ––Jamie Chisholm contributed reporting to this article.

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  • The U.S. economy is losing speed, S&P surveys show

    The U.S. economy is losing speed, S&P surveys show

    The numbers: Business conditions at U.S. companies deteriorated again in November and pointed to a slowing economy.

    The “flash” U.S. services sector index drop to a three-month low of 46.1 this month from 47.8 in October, keeping it near the lowest level of the pandemic era. The service side of the economy employs most Americans.

    The S&P Global U.S. manufacturing sector index, meanwhile, slid to a 2 1/2-year low of 47.6 from 50.4.

    Any number below 50 reflects a contracting economy.

    Key details: New orders, a sign of future sales, fell in November at the fastest pace since early in the pandemic in 2020, S&P Global found. Exports also declined.

    The cost of supplies, a measure of inflation, eased again in a sign that intense inflationary pressures are on the wane. Companies also raised prices at the slowest rate in more than two years.

    Shortages of supplies, a big problem during the pandemic, also continued to diminish.

    These shortages were one of the biggest contributors to the U.S. and global surge in inflation. While they are fading, they remain a big problem.

    Big picture: Businesses are still expanding by some measures, but they are also preparing for slower economic growth.

    Rising interest rates orchestrated by the Federal Reserve have dampened sales in the U.S. while a strong dollar has hurt exports by making American products more expensive.

    Looking ahead: “Inflationary pressures should continue to cool in the months ahead, potentially markedly, but the economy meanwhile continues to head deeper into a likely recession,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.28%
    and S&P 500
    SPX,
    +0.59%
    rose in Wednesday trades.

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  • Flash PMI data show U.S. economic downturn ‘gathering significant momentum’ in October, says S&P Global

    Flash PMI data show U.S. economic downturn ‘gathering significant momentum’ in October, says S&P Global

    The numbers: The S&P Global U.S. manufacturing sector rose slightly to 50.7 in October from 50.6 in the prior month, based on a “flash” survey.

    The flash U.S. services sector index, meanwhile, fell to 46.6 from 49.3.

    Readings above 50 signify expansion; below that, contraction.

    Economists polled by the Wall Street Journal had expected manufacturing to rise to 51.8 in October and for the service sector to rise to 49.7.

    Key details: In the service sector, the downturn was fueled by the rising cost of living and tightening financial conditions.

    New orders in the manufacturing sector fell back into contraction territory in October. Output remained resilient due to firms eating into backlogs of previously placed orders, S&P Global said.

    While price pressures picked up a bit in the service sector, the pace of the gain in inflation in the manufacturing sector was the slowest in almost two years.

    Big picture: Talk of a recession sometime in 2023 has picked up in the last week. Many economists are sounding more bearish on the outlook, especially since the Federal Reserve is now seen raising its benchmark rate to 5%. However, on Monday, economists at Goldman Sachs said that talk over a recession was overblown.

    What S&P Global said: “The US economic downturn gathered significant
    momentum in October, while confidence in the outlook also deteriorated sharply,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

    “Although price pressures picked up slightly in the service sector due to high food, energy and staff costs, as well as rising borrowing costs, increased competitive forces meant average prices charged for services grew at only a fractionally faster rate. Combined with the easing of price pressures in the goods-producing sector, this adds to evidence that consumer price inflation should cool in coming months,” he added.

    Market reaction: Stocks
    DJIA,
    +0.88%

    SPX,
    +0.58%
    were higher in early trading on Monday, while the yield on the 10-year Treasury note
    TMUBMUSD10Y,
    4.236%
    inched up to 4.24%.

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