US services from ISM and S&P Global, see employment stats and comments ahead of payroll report

The ISM February services index fell to 52.6 from 53.4 and that was just below the estimate of 53. New orders did rise a touch, by 1.1 pts to 56.1 but backlogs fell by a like amount to 50.3. Inventories remained lean for a 3^rd month as the right sizing seems to have played out (though only a few signs of restocking). It fell 2 pts to 47.1. Supplier deliveries fell by 3.5 pts after rising by almost 3 pts last month and not following the rise seen in the manufacturing index which implies the Red Sea issues hasn’t yet hit services. Prices paid fell 5.4 pts after jumping by 7.3 pts last month and at 58.6 is in line with the 6 month average of 58.9. Of particular note ahead of tomorrow’s ADP and Friday’s BLS jobs data, the employment component fell to 48 from 50.5 and is the 2^nd month in the past 3 below 50. Another point of evidence to a slowdown in the rate of hiring. Just 6 of 18 industries expanded payrolls, though up from 3 last month and vs 7 in the month before and 10 in the month before that.

On employment, one respondent in the ‘Mgmt of Companies & Support Services’ sector said, “Employers remain cautious about hiring direct employees and are considering utilizing contract labor to cover project and interim work demands as concerns about the economy continue to be front of mind.”

On the flip side, if you have skills in the utility space, “Labor continues to be in highest demand. Finding qualified and available crews and administrative staff is still difficult.”