US Economic Resilience Despite Manufacturing Decline

The recent services PMI in the US has shown strong performance, jumping to 58.5, which is well above previous expectations, suggesting robust growth in the services sector. Meanwhile, manufacturing has experienced a noteworthy decline, with the Empire State Manufacturing Index plummeting to 0.2, indicating contraction. This disconnect highlights that while services are thriving, manufacturing is struggling to keep pace, which is reflected in the composite PMI remaining at levels consistent with growth rates above 3%. Overall, the resilience in economic activity supports the notion that the US economy is outperforming in certain sectors, although this growth has yet to translate into significant improvements in labor demand or inflationary pressures.