Wants to cut but not yet, wants to cut but not by much/US PMI/Housing stats

I’ll start with this quote from Fed Vice Chair Philip Jefferson that points to a committee that wants to cut rates this year but not anytime soon. “We always need to keep in mind the danger of easing too much in response to improvements in the inflation picture. Excessive easing can lead to a stalling or reversal in progress in restoring price stability.”

The February S&P Global manufacturing and services PMI fell to 51.4 from 52. Manufacturing actually improved a touch to 51.5 from 50.7 but was offset by a 1.2 pt m/o/m decline in services to 51.3.

With regards to the lift in manufacturing, “Although only modest, the expansion was supported by a return to output growth and quicker increases in new orders and employment. Easing pressure on supply chains led to a renewed improvement in vendor performance during February, with shortened lead times for inputs enabling firms to process incoming new work in a more timely manner.” Thus, no real impact yet from the Red Sea travel diversions that has extended time of delivery but S&P Global is citing better February weather from the rougher January as a reason too for the improvement. Also, and what we’ve been watching closely for, “Optimism in the outlook led firms to build stocks of purchases and finished goods, as both returned to growth in February, with firms indicating the first expansion in pre-production inventories since August 2022.” Selling prices were little changed m/o/m.

In services, new orders fell to a 3 month low and backlogs were down too. The employment component eased as well and “Services firms highlighted caution with regards to hiring due to cost concerns and softer new order growth.” Selling prices were higher.