Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
PMIs Point To Services Sector Job Losses, Rekindled Goods Inflation
Activity across the implacable US economy nearly stalled early this month, data released on Tuesday suggested.
Flash PMIs from S&P Global showed factory activity slipped back into contraction territory in April, while a measure of services activity likewise decelerated, even as it managed to remain above the 50 demarcation line.
At 49.9, the manufacturing print was the first sub-50 reading of 2024 and counted as a miss. Consensus wanted 51.9.
The services gauge printed a five-month low
This may well strike some as a non sequitur, but when we divide labor and costs, etc, into the service sector and the manufacturing sector we make an error that is not insignificant. Services are, in fact, generally services and require certain skills to deliver properly. For many, if not most, manufacturing firms, more than half the employees on their payrolls are actually service workers: HR, engineers, accountants, IT folks, etc. Hiring these folks at US Steel, GM and others of firms their ilk puts the manufacturing firms in direct competition with service firms that hire the same kinds of employees and even sell these services to manufacturers who wish to outsource. For this reasons I always take comparisons of the manufacturing and services sectors with a large grain of salt. Service firms mostly create and deliver services. Manufacturers are generally hybrids in their characteristics.