The ISM Non-Manufacturing PMI beat expectations with 57.3 points in the report for February against 54.9 protected. The employment component rose to 55.6, and new orders leaped to 63.1, well above projections. Only the prices figure missed with 50.8 points.
The forward-looking survey is showing that the US economy has been robust in February and that businesses in the services sector remain upbeat looking forward.
The US dollar is strengthening in response, with EUR/USD falling back down toward 1.11. GBP/USD is hovering around 1.28 and USD/JPY at 107.30. USD/CAD has topped 1.34, mostly in response to the Bank of Canada’s 50 basis point rate cut.
Economists expected ISM’s Non-Manufacturing Purchasing Managers’ Index to drop to 54.9 in February from 55.5 in January. See preview. Any score above 50 represents expansion. Projections remain elevated despite the ongoing coronavirus crisis. In China, the Caixin Services PMIs crashed to the lowest on record.
The employment component serves as a hint toward Friday’s Non-Farm Payrolls report and was forecast to rise from 53.1 to 54.1 points. New Orders, the forward-looking component, was forecast to increase from 56.2 to 56.3 points. Prices Paid, which provides inflation information, was predicted to drop from 55.5 to 54.5 points.
Markit’s final Services PMI was confirmed at 49.4 points.
Ahead of the publication, EUR/USD was pressured around 1.11 due to Italy considering closing schools due to the fast spread of coronavirus. GBP/USD was hovering around 1.28 and USD/JPY around 107.30.
USD/CAD was trading closer to 1.33. The Bank of Canada has announced its decision at the same time as the ISM Non-Manufacturing PMI publication.