U.S. February ISM Services - Still resilient
After the alarmingly weak preliminary S and P services PMI of 49.7 was revised up to a marginally positive 51.0, February’s ISM services index picked up to a stronger than expected 53.5 from 52.8, a pace that suggests continued respectable growth, in line with recent trend.
The data backs our decision not to revise our payroll forecast after the unexpectedly weak ADP data, particularly a rise in the employment index to 53.9 from 52.3.
Two more contributors to the composite index also increased, deliveries to 53.4 from 53.0 and new orders to 52.2 from 51.3, though the latter is still unimpressive.
The fourth and final contributor to the composite, business activity, saw marginal slippage to a still healthy 54.4 from 54.5.
Prices paid do not contribute to the composite, and were firmer at 62.6 from 60.4, meaning there straight months above 60 after ten straight months with a 50 handle. Inflationary pressures appear to have picked up in the new year, if not dramatically yet, but the tariff impact is still to come.
