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In the latest economic data release, the Services Purchasing Managers’ Index (PMI), a key indicator of the health of the US service sector, has shown a significant increase. The actual figure came in at 55.7, outperforming both the forecasted figure of 55.2 and the previous month’s reading of 52.9.
The Services PMI is published monthly by Markit Economics and is based on surveys of over 400 executives in private sector service companies. The surveys cover a broad range of sectors including transport and communication, financial intermediaries, business and personal services, computing & IT, hotels, and restaurants. An index level of 50 denotes no change from the previous month, while a level above 50 signals an improvement, and below 50 indicates a deterioration.
The rise in the Services PMI to 55.7 suggests a marked improvement in the health of the service sector. This is particularly notable as it exceeds the forecasted figure of 55.2, indicating a stronger performance than expected. This is also a considerable increase from the previous month’s reading of 52.9, showing a steady and consistent growth in the sector.
A reading that is stronger than forecast is generally supportive (bullish) for the USD, and this latest figure is no exception. The stronger-than-expected Services PMI reading is likely to be viewed positively by investors and could potentially strengthen the USD in the near term.
In conclusion, the latest Services PMI data paints a positive picture of the US service sector, showing a stronger than expected performance and indicating a healthy and growing industry. This is likely to have a supportive effect on the USD, and could potentially influence investment decisions in the coming weeks.
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