Conflicting Signals: Services PMIs Show Weakness Amid Price Surge
After observing the conflicting signals from Manufacturing PMIs (with ISM increasing while S&P Global decreasing), along with notable price spikes in both surveys, today's Services PMIs failed to provide any clearer insight.
S&P Global's Services PMI for March settled at 51.7, unchanged from the preliminary reading, but a decline from February's 52.3, marking the lowest figure since December. Meanwhile, ISM's Services PMI disappointed with a March figure of 51.4, down from February's 52.6 and below the expected 52.8. Both indicators showed weakness at the headline level, consistent with recent soft survey data.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that the US service sector reported increased business activity in March, suggesting robust growth in the first quarter. However, he highlighted rising price pressures, especially from wage growth and increased costs of raw materials and fuel, leading to higher selling prices for goods and services. This trend is likely to contribute to near-term consumer price inflation.
Despite the conflicting data, certain sectors, such as healthcare and educational services, are experiencing continued inflationary pressures. The ISM Service Prices Paid print notably dropped to 53.4, the lowest since March 2020.
The varying perspectives on price movements in services — either the fastest pace since July (according to S&P Global) or the slowest since March 2020 (according to ISM) — raise questions about the actual trajectory of prices. Additionally, the observation that manufacturing prices, according to ISM, are on the rise further complicates the picture.
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