Drop in orders leads key service sector gauge lower
|Summary
The ISM Services Index slipped to its slowest pace of expansion since May 2020. New orders dipped 9.9 points, perhaps due to the fact that long-depleted inventories have at last been re-stocked. On balance a disappointing report, but not without some bright spots.
Just When Things Were Going So Well
The slump in service sector activity is jarring after a run of better-than-expected economic indicators in recent weeks. There is no one-off factor here that cushions the blow. The new orders component slumped 9.9 points and at 51.9, remains in expansion territory, but only barely so.
In last week's personal income and spending report, we saw most of the strength was concentrated in durable (+8.4%) and non-durable goods spending (+4.3%), whereas services outlays increased only 0.7%.
We are convinced that a surge in services spending is coming and given the rapid decline in new COVID cases throughout February, we thought we would see some indication of that improvement in today's report. But, perhaps the only tepid growth in service spending should have tipped us off that February might be too early for signs of major growth in the service sector.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.