LIVE MARKETS-B-list indicator roundup: Services PMI, trade balance, factory orders

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B-LIST INDICATOR ROUNDUP: SERVICES PMI, TRADE BALANCE, FACTORY ORDERS

A data traffic jam due to the holiday-shortened week kept investors on their toes on Thursday. While a stronger-than-expected June employment report hogged much of the limelight, here are a few of the day's economic also-rans.

Beginning with the services sector (which provided about 92% of June's private payrolls gains), which edged back into expansion last month.

The Institute for Supply Management's (ISM) non-manufacturing purchasing managers' index (PMI) USNPMI=ECI added 0.9 point to print at 50.8, a hair stronger than the 50.5 consensus.

A PMI reading above 50 signifies monthly expansion.

A closer gander at the index's subcomponents shows new orders bounded well above 50, employment dipped into contraction, and inventories - whipsawed in recent months due to uncertainties around tariffs - returned to expansion.

Prices paid - an inflation predictor - cooled to a still-elevated 67.5.

While calling the report a "welcome return to expansion," Steve Miller, chair of ISM's Services Business Survey Committee, added "slow growth and economic uncertainty were frequently referenced by respondents."

Indeed, words like "uncertainties" and "tariffs" and "increased costs" are scattered throughout survey participants' commentary.

For its part, S&P Global's final take on June services PMI USMPSF=ECI, showed the sector expanding at a slightly decelerated pace than originally reported, dipping to 52.9 from the 53.1 "flash" reading released mid-June.

"The US service sector reported a welcome combination of sustained growth and increased hiring in June, but also reported elevated price pressures," which could convince the Fed to maintain its cautious stance, says Chris Williamson, chief business economist at S&P Global.

S&P Global and ISM indexes differ in the weight applied to their various components.

This shows the extent to which the dueling PMIs agree (or not). It would appear they are generally on the same page with respect to manufacturing PMI, but they part ways at services:

The trade gap USTBAL=ECI, or the difference in the value of goods and services imported to the U.S. and those exported abroad, widened by 18.6% in May to $71.5 billion.

The reading is 12% narrower than economist predictions, notching the lowest trade deficit since November 2023.

Under the hood, Trump's erratic tariff policies are starting to sting; exports plunged by 4.0% while imports, which account for the lion's share of the United States' total international trade, dipped by measly 0.1%.

With just six days to go until the hold on Trump's "reciprocal" tariffs expire, here's a look at imports from three of the United States' biggest trading partners: Canada, China and Mexico.

Pivoting to the manufacturing sector, new orders for U.S. factory-made merchandise USFORD=ECI rebounded by 8.2% in May, sticking to the consensus landing.

The drop erased April's downwardly revised 3.9% decrease.

But nearly all of that bounce-back can be attributable to transportation goods; excluding those items, factory orders rose by a far less impressive 0.2%.

With this report, factory orders break free from the ~$600 billion range in which they've languished since June 22, which agrees with the slight improvement of the ISM data released on Tuesday, which showed the manufacturing sector trying (but failing) to bust through that border into expansion territory.

(Stephen Culp)

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