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U.S. Markit services PMI remains unchanged in June; missing forecasts

Published 06/27/2016, 09:49 AM
Updated 06/27/2016, 09:49 AM
© Reuters.  U.S. services PMI unchanged in June; missing expectations for an increase in activity

© Reuters. U.S. services PMI unchanged in June; missing expectations for an increase in activity

Investing.com – Activity in the U.S. services sector remained subdued in June while employment numbers expand at the slowest pace in a year and a half, according to preliminary data released on Monday.

In a report, market research group Markit said that its flash services purchasing managers’ index (PMI) remained unchanged at 51.3 in June.

Analysts had expected an increase to 51.9 this month.

On the index, a reading above 50.0 indicates expansion, below indicates contraction.

Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.

Markit chief economist Chris Williamson said that ““The survey data indicate that any rebound in the economy from the weak first quarter was largely confined to April, and that growth has since faded again.”

Williamson noted that, together with the manufacturing PMI data, the surveys are pointing to annualized growth of just 1.0% in the second quarter.

He pointed out that business optimism was the lowest seen since the height of the financial crisis and predicted that the uncertainty was apt to intensify in the coming months given the recent U.K. decision to abandon the European Union.

“Signs of weak economic growth and a sluggish labor market, combined with ‘Brexit’ uncertainty, suggest that already-cautious policymakers will be in no rush to tighten policy,” Williamson concluded.

In an immediate reaction, EUR/USD was trading at 1.0996 from around 1.1011 ahead of the release of the data, GBP/USD was at 1.3216 from 1.3235 earlier, while USD/JPY was at 101.61 compared to 101.57 earlier.

The US dollar index, which tracks the greenback against a basket of six major rivals, was at 96.58, compared to 96.50 ahead of the report.

Meanwhile, U.S. stocks were trading lower after the open. The Dow 30 fell 227 points or 1.31%, the S&P 500 lost 29 points or 1.36%, while the tech-heavy NASDAQ Composite traded down 67 points or 1.42%.

Elsewhere, in the commodities market, gold futures traded at $1,329.00 a troy ounce, compared to $1,331.00 ahead of the data, while crude oil traded at $46.66 a barrel from $46.77 earlier.

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