Latest / Markets with Megan: A Quick Financial Markets Update / Services Surprise: Growth or Warning? | S2 E073 | 09-05-25

Transcript

Services Surprise: Growth or Warning? | S2 E073 | 09-05-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Well, it's safe to say, the service side of the economy is holding in.
• 0:03
  Megan Horneman: It's Friday, september the 5th, and this is Markets with Megan.
• 0:05
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• 0:08
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• 0:12
  Megan Horneman: But we're here today, as we always are, to break down some of the economic data that we've gotten and what does it mean going forward from an economic growth standpoint, as well as the Federal Reserve and the desire for them to cut interest rates here in a couple weeks.
• 0:26
  Megan Horneman: So let's dig into the data we got yesterday from the ISM Survey Index and this is specifically on the services side of the economy for the month of August.
• 0:37
  Megan Horneman: And we look at this and this is extraordinarily important data point that we get at the beginning of each month, because the Americans at the beginning of each month, because the Americans spend the majority of their money on the service sector, not necessarily on goods, but on services we saw that this index ticked a little bit higher on the headline level to a 52, which means that's in expansion territory, anything above a 50.
• 1:01
  Megan Horneman: And when we dig down into the details, the positive side on that was from a new order standpoint.
• 1:07
  Megan Horneman: New orders rose to 56 compared to 50.3 in the prior month.
• 1:12
  Megan Horneman: Now this is great news.
• 1:14
  Megan Horneman: This tends to be a good leading indicator for this index.
• 1:17
  Megan Horneman: But there's two other components in here that do create some concern.
• 1:22
  Megan Horneman: It's the prices paid as well as the employment.
• 1:24
  Megan Horneman: The employment component is still in that contraction territory at a 46.5.
• 1:32
  Megan Horneman: So employment in those service areas think of getting your lawn cut, getting your hair done Employment there is starting to weaken.
• 1:41
  Megan Horneman: And then when we look at the prices paid component, this still is high.
• 1:46
  Megan Horneman: We're looking at a level of 69.2.
• 1:49
  Megan Horneman: It did moderate a little bit lower from the prior month, but still at 69.2,.
• 1:55
  Megan Horneman: The median average for this indicator is 59.
• 1:59
  Megan Horneman: Remember, anything above 50 means that it's growing or expanding.
• 2:03
  Megan Horneman: And when we're looking at 69.2, that is concerning.
• 2:07
  Megan Horneman: It's actually been above 65 for the past five consecutive months.
• 2:12
  Megan Horneman: So if service prices, or what you pay to get your lawn cut, or what you pay to get your hair done, if these things are rising, that's concerning because that's what the Fed calls sticky it's harder for those prices to come back down.
• 2:25
  Megan Horneman: So the Fed will take notice of this when they come to their meeting here in a couple weeks.
• 2:31
  Megan Horneman: That's all that we have today on the ISM report.
• 2:35
  Megan Horneman: This is a busy week.
• 2:36
  Megan Horneman: We'll be back here in a few minutes with some information we got on the labor market.
• 2:40
  Megan Horneman: Thank you and have a great day.