US Services PMI rose and beat very modestly from 57.0 to 57.1 in February (this is a flash print). This is the highest Services PMI print since October but Markit warns not to get excited, data "is up only slightly compared to the fourth quarter of last year, meaning growth this year is running at a rate similar to the 2.2% annualised pace seen late last year." ISM Services (survey) confirmed this modest improvement in February (despite all the hard data collapsing) boucing very modestly from 56.7 to 56.9 in Feb despite a drop in BusinessActivity and New Orders.
Services PMI at highest since Oct..
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As Markit notes,
“The pace of US economic growth jumped to a fourmonth high in February, according to Markit’s PMI survey data. Business picked up especially towards the end of the month, when the impact of bad weather on the East Coast and port delays on the West Coast began to clear, which suggests this may be a temporary upturn.
“Even with the strong growth recorded in February, the average reading across the manufacturing and services surveys for the first quarter so far is up only slightly compared to the fourth quarter of last year, meaning growth this year is running at a rate similar to the 2.2% annualised pace seen late last year.
“That’s certainly not a pace of expansion that will worry the Fed into hiking interest rates any time soon. However, the ongoing resilience of the US economy, and in particular the sustained robust job creation signalled in February, adds to the sense that policymakers will continue to prepare the ground for a rate rise later this year.”
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ISM Services rose modestly also...
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With virtually everything except the all important New Orders and Business Activity rebounding...
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Unlike everywhere else, the respondents did not have a hard time braving the snow in February:
- "The lower price of oil is providing a beneficial impact on certain products, specifically plastics." (Agriculture, Forestry, Fishing & Hunting)
- "Business conditions are seeing less money being spent on capital projects by the major oil companies." (Construction)
- "Business is on par or slightly up for this time of year. This time of year is considerably slower than peak season." (Arts, Entertainment & Recreation)
- "West Coast ports are causing shortages." (Health Care & Social Assistance)
- "Signs of continued, but slowed growth in our sector. Low fuel prices and utility prices helping with costs. International markets remain lagging behind US growth." (Professional, Scientific & Technical Services)
- "The West Coast port labor union situation is slowing down the products we need to release to our customers. Business is good, but waiting and not shipping on time will cost us big time." (Information)
- "Sales continue to be solid which is believed to align with lower fuel costs and overall consumer sentiment being positive." (Retail Trade)
- "Port congestion is causing major delays in the delivery of product. The reduced cost of fuel has increased our sales and we believe it will continue throughout the first quarter." (Wholesale Trade)
And here is the macro reality:
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Charts: Bloomberg
