Thursday, May 03, 2012
Services cool a little
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

After the GDP figures, which showed a fall in spite of stronger readings from the purchasing managers' indices, and which showed only weak growth in services, the usefulness of the PMIs as predictors of initial GDP readings has been called into question.

I still think the PMIs, particularly for manufacturing and services, tell us a lot about underlying private sector activity, and where the GDP numbers will eventually end up, though not for a long while.

The latest suggest some moderation in activity in April, with the service sector PMI down 2 points to 53.3 and the composite measure (manufacturing, construction and services) down to a five-month low of 53.2, from 55 in March. Another weak GDP reading was already expected for Q2 and this will have done nothing to change that view.

Meanwhile, Nationwide said house prices fell by 0.2% in April and were 0.9% down on a year earlier.