Markit's US Services PMI printed at 61.2 (massively beating the 58.0 expectations) and soaring to its highest since records began. In other words, it doesn't get any better than this. This, based on Markit's analysis, implied a Q2 GDP surge to +6% - we can only wait. There's one thing though... Business expectations (the line item that represents company's confidence in the future) plunged from 79.3 to 75.9 - not what Yellen needs... furthermore, margins continue to come under pressure as prices charged drop as input prices rise. One wonders how long before this miracle is revised due to a technical glitch?
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and the underlying factors are not exactly supportive of this being sustainable...
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“Second quarter GDP data are therefore likely to show a strong recovery after the 2.9% annualised decline seen in the first quarter. Growth in excess of 3.0% would not be a surprise. Importantly, this is not just a rebound from the weather-related disruptions to business seen earlier in the year. Companies are reporting strong demand for goods and services, linked to growing confidence among households and business customers, setting the scene for further robust economic growth as we move into the second half of the year. "
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Source: Markit [7]
