Darren Gibbs, Chief Economist at Deutsche Bank, notes that the US non-manufacturing ISM beat market expectations, rising 1.1pts to 54.5 in March – the best reading since December (we also note that the Markit services PMI was revised up to a final reading of 51.3 in March, for a 1.6pt gain in the month). Key Quotes “In the detail of the ISM survey the new orders index rose 1.2pts to 56.7 and the business activity index rose 2.0pts to 59.8. Less positively, the employment index only managed a 0.6pt improvement to 50.3, leaving it well below the levels seen in the closing months of 2015 and suggestive of an impending slowdown in employment growth (which should be of no surprise given the apparent weakness of GDP growth in late 2015 and early 2016). Staying with the labour market, the JOLTS survey reported a 0.1pt decline in the job vacancy rate to 3.7% in February, but the quits rate rose 0.1pt to 2.1% and continues to suggest that we really should be seeing firmer wage growth soon. In other news the IBD/TIPP economic optimism index fell 0.5pts to 46.3 in April and the real US trade deficit widened in February (although both exports and imports rose in the month). Net exports are on track to be a large drag on GDP growth in Q1. The Atlanta Fed’s GDPNow model estimate of Q1 GDP growth was revised down 0.3pps to 0.4% saar today, although this owes to Friday’s softer than expected auto sales data rather than today’s trade data. Our US team continue to estimate Q1 GDP growth of 0.5% saar.” For more information, read our latest forex news.