The services sector is slowing down according to the ISM Non-Manufacturing PMI: a score of 57.4 points is significantly lower than a slide from 60.1 to 59 was expected. The high score of October was the best since 2005, so a drop from the sky-high levels is not a that bad on its own.
The employment component is down from 57.5 to 55.3 points, pointing to slower hiring during the month and in theory, a negative hint towards Friday’s Non-Farm Payrolls report, although there are many factors there. The New Orders component is down from the extremely high level of 62.8 to 58.7 and Prices Paid are also lower at 60.7.
Nevertheless, the headline indicator and all the components are significantly above the 50-point threshold that separates expansion from contraction. The services sector is by far the largest in the US.
The US dollar is slightly weaker, paring some of its earlier gains.
- EUR/USD is rising from the lows and trades at 1.1837.
- GBP/USD is at 1.3435, extending an earlier recovery
- USD/JPY is around 112.68, with 113 seeming a bit far.
- USD/CAD drops but then recovers to 1.2670.
- AUD/USD is stable around 0.7605.
Earlier, Markit’s final services PMI also came out lower: 54.5 against 55.2. The US trade deficit came out at 48.7 points, worse than had been expected, but this is a second-tier figure.Get the 5 most predictable currency pairs