A few factors were responsible for the unexpected move higher. First, China’s central bank pledged to support the economy during lockdowns, and now it’s offering aid to small businesses and areas hit by the COVID virus. The stronger U.S. dollar reflects the unease in international markets. This week’s ISM manufacturing and services indices are further proof of that. Labor shortages and supply issues are the two leading factors weighing on business and consumer confidence, and a recent weak ISM report highlights these concerns. Secondly, pickup truck and car sales are falling due to a lack of electronic chips.
The US dollar climbed further today following the report, with manufacturing activity declining further in April than forecasted. However, there is still room for further growth in the economy, especially given the weaker than expected ISM data. The Services ISM Report on Business, a monthly survey of purchasing executives in all industries, is a leading indicator of economic health in the US. The report shows how much business activity is taking place in the non-manufacturing sector, which is approximately 90 percent of the total US economy.