- Prior was 55.0
- Manufacturing PMI 48.0 vs 49.6 expected (prior was 49.6)
- Composite PMI 54.1 vs 53.5 expected (prior was 54.3)
- An improvement in service sector confidence was offset by a gloomier mood in manufacturing
- Employment fell in August, dropping for the first time in three months
The US dollar rose on these numbers. .
Commenting on the data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:
“The solid growth picture in August points to robust GDP growth in excess of 2% annualized in the third quarter, which should help allay near-term recession fears. Similarly, the fall in selling price inflation to a level close to the pre-pandemic average signals a ‘normalization’ of inflation and adds to the case for lower interest rates.
“This ‘soft-landing’ scenario looks less convincing, however, when you scratch beneath the surface of the headline numbers. Growth has become increasingly dependent on the service sector as manufacturing, which often leads the economic cycle, has fallen into decline. The manufacturing sector’s forward-looking orders-to- inventory ratio has fallen to one of the lowest levels since the global financial crisis.
“At the same time, service sector growth is constrained by hiring difficulties, which continue to push up pay rates and means overall input cost inflation remains elevated by historical standards.
“The policy picture is therefore complicated, and hence it’s easy to see why policymakers are taking a cautious approach to cutting interest rates. However, on balance the key takeaways from the survey are that inflation is continuing to slowly return to normal levels and that the economy is at risk of slowing amid imbalances."
The ISM services number fell in June and that is looking like it was a misleading signal; that used to be one of the better forward-looking indicators but that's 2-3 fakeouts from it now.
ISM services