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Services catching up with manufacturing in the US

Services Surge Higher Too in the US

Posted Friday, February 19, 2021 by
Skerdian Meta • 2 min read

It became evident that manufacturing left the hard times behind in summer when it started a strong expansionary cycle. It has only been increasing since then, with the occasional cool off, as today’s report for February showed.

Services on the other hand were weak, suffering from the unrest and riots in the us last year, while coronavirus restrictions were weigh in the last few months. But, services are increasing despite that and this month they reached the highest level in 6 years. So, the US economy is running pretty hot, although the USD remains bearish.

 

Markit February Prelim US Services PMI

  • Services PMI February 58.9 points vs 58.0 expected
  • Highest since March 2015
  • January services 58.3 points
  • Manufacturing PMI February 58.5 points vs 58.8 expected
  • Prior manufacturing 59.2 points
  • Composite manufacturing 58.8 points vs 58.7 prior
The services sector is holding up. There’s plenty of optimism out there.
Here’s the rub:
“Input costs across manufacturing and services soared higher as demand outstripped supply, rising at by far the steepest rate since comparable data were first available in 2009.”
It’s not just input prices either. Firms raised their selling prices at the sharpest rate on record. Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said:
“Despite headwinds of COVID-19, extreme weather and record supply chain delays, US businesses reported the fastest output growth for almost six years in February.
“The data add to signs that the economy is enjoying a strong opening quarter to 2021, buoyed by additional stimulus and the partial reopening of the economy as virus related restrictions were eased on average across the country.
“Business sentiment remains buoyant, boosted by hopes of further stimulus and the vaccine roll out, but it’s disappointing to see this not yet translate into stronger jobs growth. Many service sector firms in particular remain reluctant to hire, cautious about adding to overheads.
“A concern is that firms costs have surged higher, driving selling prices for goods and services up at a survey record pace and hinting at a further increase in inflation.”

 

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