Much as the 3rd grade Markit US Manufacturing PMI 'beat' was blamed for the furious rally last Thursday in stocks, it appears bad news in the form of today's 3rd grade Markit Services PMI 'miss' [4] is (rightly) completely ignored by the market. While the Services segment of the economy is vastly larger and more important for 'guessers', it seems USDJPY would not provide the juice this morning as this is the weakest services performance in 4 months. Of course, "weather" is blamed and optimism for the future remains but what was odd to us is that economists claim that in February manufacturing returned to normal... but clearly services did not.
The overall index plunged...
[5]
The employment sub-index slowed notably...
[6]
Commenting on the Services PMI data, Chris Williamson, Chief Economist at Markit said [4]:
“The unusually severe winter weather undoubtedly looks to have taken its toll on the economy in the first quarter. Over the first two months of the year, the manufacturing and services PMI surveys are signalling an annualised growth rate of just 1.6%, which represents a halving of growth compared to the 3.2% pace seen in the fourth quarter.
“Payroll growth in the vast services economy also weakened alongside the disruptions to business activity, hitting the weakest for almost a year. However, companies clearly remained in expansion mode, with just over half of all firms expecting activity to rise over the coming year against just 3% expecting a decline.
But this is what he said about the US Manufacturing data just last Thursday which printed so positively...
“The flash manufacturing PMI provides the first indications that production has rebounded from the weather-related slowdown seen in January. Having slumped to a three-month low in January the PMI surged to its highest for almost four years in February, as companies reported business returning to normal after freezing temperatures and snow disrupted operations and supply chains.
so in February, Manufacturing returned to normal (not affected by weather?), but services not so much...
Credibility?