S&P Global US Flash Services PMI 54.7 vs. 58.0 expected


  • S&P Global (formerly Markit) flash PMIs

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Friday 22/04/2022 | 13:43 GMT-0

04/22/2022 | 13:43 GMT-0

composite PMI SP global US April 2022

  • Lowest since October 2021
  • Prior services 58.9
  • Manufacturing 59.7 vs. 58.2 expected
  • Previous manufacturing 58.5
  • Composite 55.1 vs 58.5 front
  • New services export orders peak in survey
  • Employment has risen sharply
  • New orders and production boosted manufacturing

The survey indicates that service providers have increased their prices at the fastest rate on record. Reading the details, the drop in confidence is due to cost concerns offsetting the surge in orders. Looking ahead, it’s a question of which will cool first, demand or prices?

Commenting on the PMI flash data, Chris Williamson, chief economist at S&P Global, said:

“While still pointing to annualized GDP growth of around 3%, the April PMI surveys indicate that the recovery is losing momentum from the strong rebound seen in March, when services activity in particular had spurred by the easing of pandemic restrictions in the United States and abroad.

“Many companies continue to report a tailwind of pent-up demand due to the pandemic, but companies are also facing increasing challenges from the rise inflation

Inflation

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general price level where a given currency is effectively buying less than it has in previous periods. In terms of valuation of strength or currencies, and by extension foreign currencies, inflation or its measures are extremely influential. Inflation stems from the global creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured with GDP). This thus generates demand pressure on a supply that is not increasing at the same rate. The consumer price index then increases, generating inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies on several levels. This includes purchasing power parity, which attempts to compare the different purchasing power of each country based on the general level of prices. By doing so, it helps to determine the country with the most expensive cost of living. The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates in the forex market. Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on the exchange. Conversely, too low inflation (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the foreign exchange market.

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general price level where a given currency is effectively buying less than it has in previous periods. In terms of valuation of strength or currencies, and by extension foreign currencies, inflation or its measures are extremely influential. Inflation stems from the global creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured with GDP). This thus generates demand pressure on a supply that is not increasing at the same rate. The consumer price index then increases, generating inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies on several levels. This includes purchasing power parity, which attempts to compare the different purchasing power of each country based on the general level of prices. By doing so, it helps to determine the country with the most expensive cost of living. The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates in the forex market. Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on the exchange. Conversely, too low inflation (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the foreign exchange market.
Read this term and cost-of-living compression, as well as ongoing supply chain delays and labor constraints.

“These headwinds, along with heightened concerns about the economic outlook and monetary policy tightening, led to a sharp drop in business confidence about the outlook in April. However, the overall pace of economic growth and hiring remains relatively strong, for now, from a policy perspective, the focus should remain firmly on the need to rein in the record inflationary pressures signaled by the survey.

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