The numbers: A barometer of enterprise circumstances at service-style firms reminiscent of resorts and hospitals held regular at a sturdy 55.1% in February, exhibiting the U.S. financial system continues to be in growth mode.
“Sales activity is generally strong despite economic headwinds,” a senior restaurant govt advised the Institute for Supply Management, writer of the report.
Numbers above 50% are a optimistic signal. The intently adopted ISM studies are the primary main indicators of every month to supply clues on how effectively the financial system is performing.
Economists polled by The Wall Street Journal had anticipated the index to drop to 54% from 55.2% in January.
Key particulars: The snapshot of the financial system offered by the service-sector index has held up higher than a comparable ISM survey of producers that confirmed weaker enterprise circumstances.
Service firms make up the majority of all U.S. companies, nevertheless, and make use of the overwhelming majority of Americans.
The largest damaging: High inflation was nonetheless a sore spot. “Prices are still growing strongly,” mentioned Anthony Nieves, chairman of the survey.
Survey highlights:
- The manufacturing gauge fell 4.1 factors to 56.3%.
- The new-orders index elevated 2.2 factors to 62.6% — the very best stage in 13 months.
- The employment barometer rose 4 factors to a 14-month excessive of 54%.
- The prices-paid index, a measure of inflation, slipped 2.2 factors to 65.6%.
- Yet firms mentioned costs are nonetheless rising too quick, placing strain on earnings and forcing them to both reduce prices or keep away from new bills.
“Most industries are being pinched by inflation and more expensive labor markets,’ an information-industry executive told ISM.
Big picture: The large service side of the economy indicates the U.S. is still on solid footing.
Yet the Federal Reserve plans to raise interest rates even higher to squash inflation, putting the economy at risk of recession.
What’s become both a source of strength and angst is the tightest labor market in decades.
Feeling secure in their jobs, Americans continue to spend enough to keep the economy out of recession. But rising wages also threaten to keep inflation high and force the Fed to raise rates even more.
Looking ahead: “The U.S. service sector economy continued to defy Fed attempts to slow down the sector through higher interest rates,” mentioned chief economist Eugenio Aleman at Raymond James. The rise within the employment index additionally provides “to evidence that the US labor market is still strong.”
Market response: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
rose in Friday trades.
Source web site: www.marketwatch.com
