Today's Report (09/04/2021)

Services PMI

U.S. service providers indicated a strong expansion in business activity during September, according to the latest PMITM data. That said, the slowest rise in new business for 13 months and labour shortages hampered output growth, as the upturn softened to the weakest in 2021 to date. Total sales were weighed down by the spread of COVID-19 and a faster decline in new export orders. At the same time, pressure on capacity was reflected in the sharpest rise in backlogs of work since data collection began almost 12 years ago. Challenges expanding workforce numbers reportedly exacerbated difficulties clearing incoming new business.

The seasonally adjusted final IHS Markit US Services PMI Business Activity Index registered 54.9 in September, slightly higher than 54.4 posted by the earlier released 'flash' estimate but down from 55.1 in August. Output growth remained strong overall, despite softening to the slowest in nine months. Where an increase in business activity was reported, firms linked this to a sustained rise in client demand. The expansion was, however, hampered by insufficient capacity to process new work as well as demand having been subdued by COVID-19, notably in the hospitality sector.

Market Compisite PMI

The IHS Markit U.S. Composite PMI Output Index* posted 55.0 in September, down from 55.4 in August to signal a strong, albeit slower expansion in private sector business activity. The rate of growth was the softest in a year amid slower upturns in both monitored sectors.

New business increased further during September, but the rate of expansion eased to the slowest in nine months. Manufacturers and service providers alike registered softer upticks in client demand. Goods producers reported a quicker rise in new export orders, which contrasted with a faster contraction in service sector foreign customer demand.

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What Is It?

The Service PMI release is published monthly by Markit Economics. The data are based on surveys of over 400 executives in private sector service companies. The surveys cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants.

The US Markit Composite PMI is the composite reports on manufacturing and services.

What Are The Fundamental Effects?

An index level of 50 denotes no change since the previous month, while a level above 50 signals an improvement, and below 50 indicates a deterioration. A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.

How Does It Affect The Markets?

CURRENCY - Typically with a release of 50 or higher the dollar might bounce higher as it suggests the economy is doing well and inflation is in check.

STOCKS - The Equity market generally reacts positively to a rising PMI, however, if the economy is already in a high gear it could suggest an overheating economy and the Federal Reverse might boost interest rates to cool business activity.

BONDS - A release consistently above 50 is typically viewed as bearish for fixed incomes because if the economy is also into an expansionary phase it could aggravate inflation and