July 7, 2021

Market Starts Cautious After ISM Data Released This June!

 Activity in the U.S. services industry expanded at a moderate pace in June due to a shortage of manpower and raw materials.

The Institute for Supply Management (ISM) reported that the non -manufacturing activity index fell to a reading of 60.1 in June from a reading of 64.0 in May, the highest reading in history. The reading is off the expectations of economists who are targeting a reading of 63.5.

Readings above the 50 level indicate that the services sector is expanding while readings below the 50 level indicate a contraction.

The U.S. economy has faced the challenge of labor and raw material shortages after the economy reopened after more than a year of Covid-19 outbreaks. To date, more than 150 million people have been vaccinated to be able to curb the spread of Covid-19 and the withdrawal of emergency measures. This indirectly increases the demand for services and goods.

The survey measure of order arrears increased from 61.1 in May to 65.8 in June. New order readings still remain good and there is room to continue to increase in the coming months. With supplies showing no signs of shortage, businesses continue to pay more for inputs. The report showed that the price reading paid by the services industry fell from the 80.6 it tasted in May to a reading of 79.5. The continued increase supports the view of some economists that higher inflation is proving to be more stable than the Federal Reserve imagined.

The view was also shared by Treasury Secretary Janet Yellen, who warned that Fed chairman Jerome Powell has repeatedly said that high inflation is only temporary in the expectation that the supply chain will be normal and optimal.

The US dollar index, which measures the greenback against six major currencies, strengthened 0.10% to 92.502 as of 10.35 p.m.