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The latest release of the U.S. Services Purchasing Managers’ Index (PMI) data has revealed a stronger than expected performance, indicating a solid growth within the service sector of the economy. The actual number came in at 54.4, surpassing the forecasted figure of 54.3.
Based on surveys of over 400 executives in private sector service companies, the Service PMI release is a monthly publication by Markit Economics. The data collected encompasses a wide range of sectors including transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants.
The PMI is a significant economic indicator with an index level of 50 denoting no change since the previous month. A level above 50 signals an improvement, and below 50 indicates a deterioration. The latest figure of 54.4 not only surpasses the forecast, but also indicates a considerable improvement from the previous number of 51.0.
This stronger than forecast reading is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD. The fact that the actual figure has outperformed forecasts and shown a significant improvement from the previous month is a positive sign for the U.S. economy. It indicates a robust growth and expansion within the service sector, which forms a significant part of the U.S. economy.
The solid performance of the services sector is a positive sign for the overall health of the U.S. economy. It suggests that businesses are confident and expanding, which could lead to increased hiring and investment. The strong Services PMI reading is likely to boost investor confidence and could potentially strengthen the USD in the coming weeks.
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