Latest / Markets with Megan: A Quick Financial Markets Update / Key Insights from the Latest ISM Data | Episode 168 | 09-05-24

Transcript

Key Insights from the Latest ISM Data | Episode 168 | 09-05-24 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The headlines may say this ISM services report that we got today was kind of boring and to be honest, it was.
• 0:06
  Megan Horneman: It was relatively flat for the month.
• 0:08
  Megan Horneman: It's Thursday, eptember 5th, and this is Markets with Megan.
• 0:11
  Megan Horneman: I'm coming to you today to discuss the ISM services report that we received this morning.
• 0:16
  Megan Horneman: Much on this report, but here in our group we love to look at this report.
• 0:28
  Megan Horneman: Why is that?
• 0:28
  Megan Horneman: It's because this is where most of the economic growth is generated.
• 0:30
  Megan Horneman: Consumers spend most of their money on services, not goods.
• 0:33
  Megan Horneman: So while the manufacturing report that came out earlier this week showed that we continue to contract on the manufacturing sector, the service side has actually held in pretty steady.
• 0:42
  Megan Horneman: We saw in the month of August that we've been now back in expansion territory, which is a level above 50.
• 0:50
  Megan Horneman: We reached a low in this index back in June, but we've been consistently moving right around a little above that expansion territory.
• 0:58
  Megan Horneman: So it means the service side of the economy is holding its own.
• 1:02
  Megan Horneman: Why do we really like this report?
• 1:04
  Megan Horneman: Service side of the economy is holding its own.
• 1:06
  Megan Horneman: Why do we really like this report?
• 1:07
  Megan Horneman: Because one of the areas that we talk about consistently, and we know that the Federal Reserve is looking at is the prices paid component.
• 1:11
  Megan Horneman: This is an inflation indicator and we have often talked about how inflation is moving towards the Fed's target.
• 1:18
  Megan Horneman: It's going to give them the flexibility to cut interest rates in a couple of weeks, but they have to be very careful because service prices, where we spend the most of our money, are still growing at uncomfortably high levels and well above the level of wages.
• 1:33
  Megan Horneman: Now if you look at this report, there's a component in it for prices paid.
• 1:37
  Megan Horneman: Prices paid jumped up to 57.3.
• 1:40
  Megan Horneman: It's the second consecutive month that this has been moving higher and a level approaching 60 is worrisome and it should be something gaining the Fed's attention.
• 1:50
  Megan Horneman: We also saw some weakness in the employment component.
• 1:54
  Megan Horneman: It was one month because if you look through this whole year, the employment component in the service side of the economy, it's up one month, it's down one month.
• 2:03
  Megan Horneman: It's up one month, it's down one month.
• 2:04
  Megan Horneman: We're going to get more information about that tomorrow in the labor report.
• 2:11
  Megan Horneman: So that's all we have today for the service side.
• 2:13
  Megan Horneman: Service side of the economy is holding its own, but the price is paid is something we have to be very careful of and what markets should not ignore and the Fed should not ignore as well.
• 2:20
  Megan Horneman: We'll be back tomorrow with the much anticipated employment report that we'll get for the month of August.
• 2:27
  Megan Horneman: If you like these podcasts, please hit the like button, subscribe, hit that alarm bell and if you want a full, detailed library of our podcasts, please go to marketswithmegan.
• 2:36
  Megan Horneman: fm.
• 2:37
  Megan Horneman: Thank you.