“May data indicated a quicker rise in input costs across the service sector, as supplier price hikes intensified cost pressures,” IHS Markit said, in the color accompanying the final read on the May services PMI for the US. “The rate of inflation accelerated for the seventh month running and was the sharpest on record.”
Those excerpts could have walked out of any PMI released over the past several months. It’s the same story over and over again.
The headline read on the services gauge was revised slightly higher (figure below) from the flash print, to 70.4 from 70.1. It marked another series high. Prices charged rose to 66.1, up from 62.1 in April.
“Further robust expansions are indicated for the summer months, with an improving order book situation accompanied by elevated levels of business confidence and the further easing of virus restrictions both at home and abroad,” Chris Williamson, Chief Business Economist at IHS Markit, said Thursday.
Notably, the employment gauge fell. Although staffing levels rose and “the rate of job creation remained sharp,” the survey noted that “the pace of increase eased slightly” due in part to “challenges enticing workers back to employment and finding suitable candidates for available vacancies.” Again: It’s a broken record.
Minutes later, ISM services beat expectations, printing 64 for May (figure below). Economists were looking for 63.2. 64 is a new series high in data back to 1997.
Although new orders and activity rose, the employment gauge dropped, an echo of the dynamics on display in ISM manufacturing earlier this week. You might recall that markets weren’t amused with the decline in the employment index in the manufacturing survey.
Prices paid jumped to 80.6, the highest since September of 2005.
One respondent captured the entire economic zeitgeist in a single sentence. “Stimulus money, increased vaccinations, increased dining capacity and pent-up demand are driving a fast recovery for dine-in restaurants — and all consumer segments, it seems — resulting in labor shortages and supply chain gaps,” someone in Accommodation & Food Services remarked.
Commenting further on Thursday, IHS Markit’s Williamson cautioned that while demand is robust, “unsurpassed levels” on myriad price gauges “will add to inflation worries… inevitably lead[ing] to speculation about an earlier than previously expected tapering of Fed policy.”
Enough said.
The Fed, like other central banks saved people from a Great Depression like crash caused by the pandemic, but, it’s time to forget that fact and point to them as the cause for what makes some people a little uncomfortable.
A little over a year ago Powell was in hot water for not lowering rates to zero as trump bullied him with an onslaught of media attacks. Obviously it’s impossible to placate anyone at any time.
Anyone for piling on those at the bottom of the economic ladder? Who needs a minimum wage job when you can collect an extra $300 from the government hoping your house or car won’t need more than $400 in repairs which would wipe out your savings. If these people exist (I didn’t come across any when I was in the lower earning centiles), how did they get that way. Do they exist, but are afraid to admit their big scam on air. That seems unlikely when plenty of citizens are more than happy to publicly declare their allegiance to all manor of antisocial behaviors and beliefs. Seems like only yesterday some were happy to embrace violence against their fellow humans than wear a mask. Admitting one is sitting at home on the dole and playing a video game called Robinhood would seem a trifle.
“If these people exist … ” I assure you they do. I employ two of them personally to do work around my house.