Latest / Markets with Megan: A Quick Financial Markets Update / 042: Decoding the ISM Services Report 09-06-23

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042: Decoding the ISM Services Report 09-06-23 · Markets with Megan: A Quick Financial Markets Update

• 0:04
  Megan Horneman: Hello, I'm Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:08
  Megan Horneman: We're coming to you today with our regular segment of Markets with Megan.
• 0:11
  Megan Horneman: We're going to talk about the ISM Services Report that came out today.
• 0:15
  Megan Horneman: The Service Report is important because the majority of the money that Americans spend on is on the service sector.
• 0:21
  Megan Horneman: This report, we look at it in two ways.
• 0:24
  Megan Horneman: From an economic standpoint, it was very strong.
• 0:27
  Megan Horneman: We had new orders jump.
• 0:29
  Megan Horneman: Employment in the service sector jumped after a pretty weak reading last month.
• 0:34
  Megan Horneman: We also saw businesses clearing that backlog of orders.
• 0:37
  Megan Horneman: This is good as far as not looking for an inventory overhang, those backlogs of orders.
• 0:43
  Megan Horneman: They cleared them out so much that indicator's only been lower one other time since the Great Recession in 2007 to 2009.
• 0:53
  Megan Horneman: From the inflation and the Fed standpoint, the Fed is not going to like this report.
• 0:57
  Megan Horneman: We saw the prices paid component of this jump pretty substantially.
• 1:01
  Megan Horneman: It's the second consecutive month that we've seen this rise.
• 1:07
  Megan Horneman: The Fed's going to look at that because they've consistently talked about sticky inflation.
• 1:12
  Megan Horneman: Service inflation has been something that is considered sticky and very difficult to keep under control.
• 1:18
  Megan Horneman: We don't think this changes anything that they do at the next meeting, which is September 20th.
• 1:24
  Megan Horneman: We do think that they're going to have to take a little bit more of a hawkish stance.
• 1:28
  Megan Horneman: We'll wait and see what happens from the consumer price index next week, but when the Fed looks at this they're going to see not only is the service sector re-energized, but we're also seeing that inflation issue a concern for them.
• 1:43
  Megan Horneman: That's all we have today.
• 1:44
  Megan Horneman: If you have any questions or comments, please feel free to reach out to podcasts at verdence.
• 1:48
  Megan Horneman: com.
• 1:49
  Megan Horneman: Thank you.