US Industry Back in Full Force but Services PMI Disappoints
- 23.07.2021 03:30 pm
Commenting on contrasting US Manufacturing and Services PMI data, Caleb Thibodeau, Associate at Validus Risk Management, said: “Having stalled at index all-time highs in June, this US Manufacturing PMI release marks a new index high as industry supply chain bottlenecks are resolved, such as chip shortages for automakers, and as the labour market continues to return to capacity. At the same time, while the service industry had been roaring back in the second quarter, the disappointing US Services PMI release today reflects what markets have been starting to show this week: that new COVID-19 variants pose a material risk to national re-opening efforts going forward.
“Along with new variant-related risks, Services will also have to manage additional pressures going forward: namely, wage and price inflation. Enticing consumers at a higher price tag while balancing increasing labour shortages may translate into lost revenue and higher labour costs.
“Overall, PMI as a leading indicator has spoken up with this release: factories and industry are back in full force but further progress on the pandemic is required before the next step in the recovery for services. Today’s PMI print bodes well for the Federal Reserve to continue toeing the ‘cautious’ line. It’s clear that supply chains and new orders are well on their way as the economic recovery progresses, but the pandemic and labour market conditions continue to threaten hospitality and entertainment in many states.”