PMI data is still showing that inflation is a major problem

NEW YORK (Mar 3)  Services PMI results from around the world so far have been as close to expectations as you can get. Starting with China Wang Zhe, senior economist at Caixin Insight Group said, “Over the past month, Covid-19 flare-ups in several regions had a relatively large impact on the services sector.” “Demand for services contracted, while supply expanded at a limited pace. The spread of Covid-19 in several regions hurt the business operations of service companies. The business activity index managed to remain in expansionary territory in February, but fell to its lowest point in six months,” he added.

In the U.K. the IHS Markit/CIPS services Purchasing Managers’ Index (PMI) rose to 60.5 in February from 54.1 in January, just slightly below an initial flash estimate of 60.8 but the highest since June. Andrew Harker, economics director at IHS Markit noted “Although the latest set of PMI data were encouraging, the inflationary picture still has the potential to limit growth, while it remains to be seen what impact the Russian invasion of Ukraine will have on the service sector and wider economy,”.

Of course, we have not seen the rest of the inflationary pressure. EUR/USD and GBP/USD have fallen in recent times and energy and soft commodities prices continue to rise. Spot WTI 116.51 overnight and a 22.80% rise this week so far. In the soft commodity sector, corn and wheat prices are also surging and this potentially could ad to the pressure the service sector is facing which was noted in almost all the PMI reports so far.

Later on, the market will get the latest figures from the U.S. and the ISM Non-Manufacturing PMI figure is expected to hit 61.0 higher than the previous figure of 59.9. There is also the initial jobless claims data and comments from Fed Chair Powell and Williams to contend with.

 U.K. Services PMI (Feb) 60.5 vs exp 60.8 prev 54.1

EU Services PMI (Feb) 55.5 vs exp 55.8 prev 51.1

German Services PMI (Feb) 55.8 vs exp 56.6 prev 52.2

Chinese Caixin Services PMI (Feb) 50.2 vs exp 50.9 prev 51.4

Japanese Services PMI (Feb) 44.2 vs exp 42.7 prev 47.6

Australian Services PMI 57.4 vs exp 56.4 prev 46.6

KITCO