Latest / Markets with Megan: A Quick Financial Markets Update / Service Sector Contraction Sparks Economic Concerns | Episode 152 | 07-03-24

Transcript

Service Sector Contraction Sparks Economic Concerns | Episode 152 | 07-03-24 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: So it's one of my favorite economic readings that we got this morning and you guys have heard me talk about it.
• 0:04
  Megan Horneman: It's the reading on the service sector of our economy.
• 0:07
  Megan Horneman: This is Wednesday, july 3rd, and we're here to discuss the ISM services report.
• 0:13
  Megan Horneman: The reason why I like to focus on this is because consumers spend the majority of their money on the service sector and we've seen the service sector continue to be very resilient throughout high inflation, high credit card debt, and today was a really disappointing reading.
• 0:29
  Megan Horneman: We got on ISM services for the month of June.
• 0:32
  Megan Horneman: The expectation was that services continued to expand for the month of June and unfortunately it fell all the way down to 48.8.
• 0:40
  Megan Horneman: And if you've listened to my podcast in the past, a reading above 50 is expansion and a reading below 50 is contraction.
• 0:48
  Megan Horneman: It's the lowest level we've seen since the pandemic, since May of 2020.
• 0:53
  Megan Horneman: The employment component also was much weaker than anticipated, at 46.1.
• 0:58
  Megan Horneman: They expected at 49.5.
• 1:01
  Megan Horneman: New orders also contracting, but what we were looking at was prices paid, because that's where the inflation has been sticky on the service side and that also came down a bit.
• 1:11
  Megan Horneman: It's at 56.3 versus 58.1 in May.
• 1:16
  Megan Horneman: It's the lowest since June of 2023, so about a year low, but it still is high, and this is something that we can't ignore, the Fed won't ignore.
• 1:25
  Megan Horneman: It's very disappointing from the economic standpoint, but we need these inflation, especially that sticky inflation, to come down.
• 1:33
  Megan Horneman: So that's what we have today.
• 1:35
  Megan Horneman: It's the last day before the 4th of July holiday.
• 1:38
  Megan Horneman: Tomorrow, Friday will be the jobs report.
• 1:38
  Megan Horneman: hope everyone enjoys the Independence Day celebrations.
• 1:41
  Megan Horneman: We'll come back, though, and we'll give you that update on Monday.
• 1:47
  Megan Horneman: The jobs report is an extraordinarily important report, especially since today we got the first reading on ADP employment change, and it was mixed.
• 1:56
  Megan Horneman: It was a little bit weaker than anticipated.
• 2:00
  Megan Horneman: So the concern is we might get some mixed data here on Friday, but we'll be back to give you lots of details about that on Monday.
• 2:06
  Megan Horneman: If you have any questions or comments, please feel free to reach out to podcasts at Verdence.
• 2:09
  Megan Horneman: com.
• 2:10
  Megan Horneman: Thank you.