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Nov 3, 2016 - Page 1 of 3. © IHS Markit 2016 ... Page 2 of 3. © IHS Markit 2016. Both the ... in business activity for nearly one year after inflows of new orders ...
News Release

Purchasing Managers’ Index™ MARKET SENSITIVE INFORMATION rd

EMBARGOED UNTIL: 0945 (EDT) / 1345 (UTC) November 3 2016

Markit U.S. Services PMI™ – final data (with composite PMI™) Sharp improvement in service sector growth during October Key findings: Services business activity expands at fastest pace since November 2015

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Robust increase in new work, but job creation remains subdued Input price inflation accelerates to 15-month high

Data collected October 12-26

Service sector business activity (seasonally adjusted)

Source: IHS Markit.

October data pointed to a relatively strong month for the US service sector, with business activity and incoming new work rising at the fastest rates since November 2015. Survey respondents attributed the recovery in growth momentum to improving domestic economic conditions and greater consumer spending in particular. The latest figures also highlighted that inflationary pressures picked up since September, with average cost burdens rising at the strongest pace for 15 months. Adjusted for seasonal influences, the final Markit U.S. Services Business Activity Index registered 54.8 in October, up markedly from 52.3 in September and above the crucial 50.0 no-change value for the eighth consecutive month. The latest reading signalled a robust upturn in service sector

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output, with the rate of expansion the steepest for almost one year. Mirroring the trend for business activity, latest survey data revealed that new orders picked up at the strongest pace since late-2015. Anecdotal evidence suggested that improved confidence among clients had boosted new business growth, alongside new product launches and successful marketing initiatives. A robust and accelerated rise in incoming new work contributed to an accumulation of unfinished business at service sector companies in October. The rate of backlog accumulation was the fastest since March 2015 and slightly stronger than the post-crisis trend. Despite signs of renewed pressure on operating capacity, job creation picked up only slightly from September’s three-and-a-half year low. Some firms cited cautious hiring strategies in response to heightened uncertainty about the business outlook. However, the latest survey indicated that service providers were more upbeat overall about their year ahead growth prospects in October. The degree of positive sentiment recovered to its highest since August 2015, which was partly linked to a recent rebound in new business growth. Meanwhile, service providers signalled a much sharper pace of input cost inflation than the 19month low recorded in September. The latest rise in average cost burdens was the fastest since July 2015. Higher operating costs and signs of improving client demand resulted in a moderate increase in average prices charged by service sector companies in October. Mirroring the trend for input costs, the rate of prices charged inflation was also the fastest since mid-2015. Markit Final U.S. Composite PMI™ The seasonally adjusted final Markit U.S. Composite PMI™ Output Index rose to 54.9 in October, from 52.3 in the previous month. The latest reading signalled the strongest upturn in private sector output since November 2015.

© IHS Markit 2016

News Release

Markit Composite PMI and U.S. GDP

Both the manufacturing and service sector recorded faster rates of expansion in October. Production growth across the manufacturing sector was the fastest for 12 months (output index at 55.5). The composite index is based on original survey data from the Markit U.S. Services PMI and the Markit U.S. Manufacturing PMI.

Comment Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: “Indications of stronger economic growth, solid job creation, rising prices and improved business confidence all pave the way for the Fed to hike interest rates again by the end of the year.

Sources: IHS Markit, U.S. Bureau of Economic Analysis.

“The surveys are signalling the largest monthly rise in business activity for nearly one year after inflows of new orders surged higher in October. “The upturn in new work helped drive renewed optimism about prospects for the year ahead. However, it’s evident that many businesses remain cautious as the presidential election nears. As a result, employment growth across the services and manufacturing sectors remained one of the weakest seen for over three years, though still signals a respectable 130,000 rise in non-farm payrolls in October. “There’s therefore nothing in this month’s PMI reports to deter the Fed from raising interest rates again, with a move likely to be seen in December.”

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For further information, please contact: IHS Markit Tim Moore, Senior Economist Telephone +44-1491-461-067 Email [email protected] Joanna Vickers, Corporate Communications Telephone +44207 260 2234 E-mail [email protected]

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© IHS Markit 2016

News Release

Note to Editors: The U.S. Services PMI™ (Purchasing Managers’ Index™) is produced by Markit and is based on original survey data collected from a representative panel of over 400 companies based in the U.S. service sector. Markit originally began collecting monthly PMI data in the U.S. service sector in October 2009. The final U.S. Services PMI follows on from the flash estimate which is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data. The Markit U.S. Services PMI complements the Markit U.S. Manufacturing PMI and enables the production of the Markit U.S. Composite PMI which tracks business trends across both the manufacturing and service sectors, based on original survey data collected from a representative panel of over 1,000 companies. The panel is stratified by North American Industrial Classification System (NAICS) group and company size, based on industry contribution to U.S. GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indictors the ‘Report’ shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the ‘diffusion’ index. This index is the sum of the positive responses plus a half of those responding ‘the same’. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease. Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) numbers, first published seasonally adjusted series and subsequently revised data are available to subscribers from Markit. Please contact [email protected]. About IHS Markit (www.ihsmarkit.com) IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and expertise to forge solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth. IHS Markit is a registered trademark of IHS Markit Ltd. All other company and product names may be trademarks of their respective owners © 2016 IHS Markit Ltd. All rights reserved. About PMI Purchasing Managers’ Index® (PMI®) surveys are now available for over 30 countries and also for key regions including the eurozone. They are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/economics. The intellectual property rights to the U.S. Services PMI™ provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. IHS Markit is a registered trademark of IHS Markit Ltd. If you prefer not to receive news releases from IHS Markit, please email [email protected]. To read our privacy policy, click here.

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© IHS Markit 2016