Goods to services handoff begins in DMs

By in Global Macro

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Goldman with the note:

DM trends:

The DM composite flash PMI increased by 1.4pt in March, reflecting an expansion in services (+1.6pt) from further easing of Omicron restrictions.

Country-level trends:

The manufacturing flash PMI increased in the US (+1.2pt), edged up in Japan (+0.4pt) and Australia (+0.3pt), but declined in the Euro Area (-1.1pt) and especially in the UK (-2.5pt).

The services flash PMI increased in Japan (+4.5pt) and the US (+2.4pt), but edged down in the Euro Area (-0.6pt). Early US business activity surveys were strong for services, but mixed for manufacturing.

Activity components:

The DM flash forward-looking components decreased sharply for services (future activity down by -6.0pt) on concerns over the war in Ukraine.

The composite flash employment PMI increased in the US (+1.4pt) consistent with mostly positive early US employment surveys, ticked up in Australia (+0.4pt) and in the UK (+0.3pt), and remained roughly unchanged in the Euro Area and Japan.

Charts. Services are rising as manufacturing fades amid the handoff from goods continues:

 

But expectations for future services activity also took a blow from war:

Not panic stations on either but I expect the screw to tightens on the oil, property and Fed shocks until something breaks…

Houses and Holes
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