Today's Report (01/05/2022)

Markit Service PMI

US services providers registered another steep expansion in business activity at the end of 2021, according to the latest PMI data. The upturn eased slightly to the slowest for three months but was supported by a sharper increase in new business. The rise in new orders was the fastest for five months, as demand conditions strengthened. Although firms sought to expand workforce numbers to tackle strong growth in backlogs of work, labor shortages and challenges retaining staff hampered progress, with employment rising only marginally. Nevertheless, hopes of further upticks in demand drove business confidence to the highest since November 2020.

Markit Composite PMI

The IHS Markit US Composite PMI Output Index posted 57.0 in December, down slightly from 57.2 in November. The latest data signalled a steep increase in private sector business activity, albeit largely driven by the service sector as manufacturing production rose at a relatively muted pace.

At the same time, new business rose sharply amid a pick-up in service sector client demand. Overall new order growth was the quickest for five months. New export orders, meanwhile, increased for the second month running amid greater client demand at manufacturers and service providers.

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US Markit Services PMI

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.

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.

US Markit Composite PMI

What is it?

The PMI monthly Composite Reports on manufacturing and services.

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 invite higher interest rates.