ISM Services Report Signals Sticky Inflation, With Prices Index Explaining 74% of CPI Moves
Updated
Updated · Real Economy Blog · Jun 1
ISM Services Report Signals Sticky Inflation, With Prices Index Explaining 74% of CPI Moves
3 articles · Updated · Real Economy Blog · Jun 1
Friday’s ISM services report is expected to show service-sector prices still rising, reinforcing broader inflation pressure beyond the market’s focus on the jobs data.
Service costs matter because a simple regression cited in the report shows the ISM services prices-paid index explains 74% of variation in the consumer price index.
That pressure predates the latest supply shock and fits a wider post-pandemic regime shift of higher inflation and interest rates across the economy.
Sticky services inflation, rather than only rising oil and gasoline prices, is likely to weigh more heavily on expectations for possible Federal Reserve rate hikes later this year.