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ISM Services Close To Expected Whilst New Orders Volatility Remains

US DATA
  • The ISM Service index was very close to expected as it increased to 51.9 (cons 51.8) from 51.2.
  • Prices paid and employment sub-components didn’t move the needle, with prices paid up just 0.1pp to 59.6 after the prior month’s 6pt drop (in contrast to the latest build in PMI price pressures) and employment falling 0.5pps to 50.8.
  • Volatility in new orders continues but doesn’t offset prior weakness (+3.9pts after -10.4pts in Mar) with new export orders particularly noisy as they bounced +17.2pts after -18.0pts.
  • Despite the noise, the level of new orders (56.1) remains far stronger than in mfg (45.7), helping drive the still sizeable discrepancy between overall mfg and service indices, with the relative strength of services helping support real GDP growth of 1.6% Y/Y in Q1.

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