US factories cut output in August while surveys show services surging. How do you trade a two-speed economy?

The Federal Reserve reported on 18 September that US industrial production was unchanged in August. Manufacturing output fell 0.3%, its first decline after seven straight monthly gains, while utilities jumped 1.8% (full report).

The surveys tell a different story for services. The ISM services index rose to 55.4 from 54.1 (report), and S&P Global's flash US PMI in August showed services activity at a 20-month high while manufacturing output slipped to a 13-month low. The ISM manufacturing index fell to 54.6 from 55.6 but stayed in expansion (report). The Federal Reserve then raised its target range to 3.75%–4.00% on 16 September (report).

So hard data and surveys don't line up neatly, and manufacturing and services are heading in different directions. We would like to hear how you deal with that.

• Do you give more weight to hard data such as industrial production, or to surveys such as the PMIs?
• Does a weak factory reading change your view of the dollar, or do you mostly follow services, jobs and inflation?
• When two reliable sources disagree, what do you do: wait for the next release, cross-check with a third, or trade smaller?
• Has a divergence like this ever caught you out, or helped you?

PMIs explained is a good refresher on how the survey numbers are built.

Please keep replies to your own reasoning. Posts that promise a direction or sell signals will be removed.