(Kitco News) - Services PMI’s have been mixed so far. Most of the major nations are in expansionary territory but the likes of Australia and Japan are still struggling with the impact of the COVID-19 pandemic and lockdowns have impacted the service sector in those nations. The good news from an Asian perspective is the Indian reading, India has struggled immensely with the pandemic, and to see a reading which was in expansionary territory (56.7) vs the economist expectations of 48.5 was at least a good sign. Lots of U.K. producers have been waiting for products and parts from India and it has caused PPI to rise and a general shortage of finished and unfinished goods.
In the U.K. the IHS Markit report noted job creation hit a record high, but supply shortages contribute to the slowest output growth for six months. Remember a certain aspect of the report will be lagging but the situation is still nowhere near pre-pandemic levels from a supply standpoint. Business optimism climbed to a three-month high and the service sector in the U.K. makes up for a lot of the nation’s GDP so this is positive news.
Tim Moore, Economics Director at IHS Markit, said “The service sector lost momentum for the third consecutive month as the impact of looser pandemic restrictions faded in August. Many businesses suffered constraints on growth due to staff shortages, self-isolation rules, and stretched supply chain capacity.”
The European report noted, the fact that the euro area economy recorded another marked expansion in business activity during August, with momentum only fading slightly from July’s 15-year peak. Jobs growth continued and was at one of the fastest rates seen in over two decades, as firms swiftly acted to boost operating capacities amid strong demand for goods and services.
In terms of country-specific news, Irish service providers continued to outperform their euro-area peers during the latest survey period, while those in France registered the softest expansion in service sector activity. However, with the exception of Italy where growth was unchanged, rates of expansion slowed in all nations from July.
Later in the session, we will get the latest U.S. ISM Non-Manufacturing PMI for August the analyst consensus is for the number to drop to 61.5 from the previous reading of 64.1. The major event will still be the non-farm payroll number that is expected to print at 750k.
Japanese Services PMI (Aug) 42.9 vs prev 47.4Australian Services PMI 42.9 vs prev 44.2
Indian Nikkei Services PMI (Aug) 56.7 vs exp 48.5 prev 45.4
German Services PMI (Aug) 60.8 vs exp 61.5 prev 61.8
EU Services PMI (Aug) 59.0 vs exp 59.7 prev 59.8
U.K. Services PMI (Aug) 55.0 vs exp 55.5 prev 59.