EMBARGOED UNTIL: 0945 (EST) / 1445 (UTC) February 3rd 2016 ... Markit U.S. Services PMI Business Activity Index .... PMI
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EMBARGOED UNTIL: 0945 (EST) / 1445 (UTC) February 3 2016
Markit U.S. Services PMI™ – final data (with composite PMI™) Services activity growth eases to its weakest for 27 months Key points: Business activity increases at slowest pace since October 2013
53.2 in January, down from 54.3 in December, to indicate the weakest pace of activity growth since the current period of expansion began in late-2013. Although still above the crucial 50.0 no-change value, the latest index reading was also below the average recorded since the survey began in October 2009 (55.8).
New work rises at softer rate, but job creation strengthens at start of 2016 Service sector optimism remains relatively subdued Markit U.S. Services PMI Business Activity Index
The seasonally adjusted final Markit U.S. Composite PMI™ Output Index registered 53.2 in January, down from 54.0 in December, to signal the weakest rise in private sector business activity since October 2013. The overall slowdown in January largely reflected a more subdued expansion of service sector activity, as manufacturing output rose at a slightly faster pace than December’s 26-month low. Markit U.S. Composite PMI™ Output Index
Source: Markit.
January data highlighted that U.S. service providers started the year with a further slowdown in output and new business growth. At the same time, survey respondents indicated a relatively subdued degree of confidence about their prospects for growth over the next 12 months, with firms linking this to heightened uncertainty about the wider economic outlook. Source: Markit, US. Bureau of Economic Analysis.
Employment growth was nonetheless sustained in January and the latest rise in payroll numbers was the fastest since September 2015. Input cost inflation remained marginal, helped by falling fuel prices, which in turn led to only a slight increase in service sector output charges during the latest survey period.
Reports from survey respondents suggested that softer new business growth was the main factor weighing on service sector output in January. Moreover, a number of firms noted signs of a cyclical slowdown in client demand, driven in part by greater caution about the economic outlook. Reflecting this, January data pointed to a moderate increase in new work across the service economy, with the rate of expansion easing to a 12-month
Adjusted for seasonal influences, the final Markit U.S. Services Business Activity Index registered Page 1 of 3
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low. Slower growth of incoming new business contributed to a drop in backlogs of work for the sixth consecutive month in January. A further solid expansion of staff hiring helped to reduce capacity pressures at the start of 2016. Rising payroll numbers were linked to new product launches and ongoing business expansion plans. That said, the latest survey indicated that service providers’ overall degree of business confidence was up only slightly since December and still close to its lowest recorded for three-and-a-half years. Meanwhile, service sector firms continued to experience subdued cost inflation in January, despite reports of rising salary pressures. Prices charged by service providers increased for the fourth month running, but the rate of inflation remained marginal. Comment: Commenting on the PMI data, Chris Williamson, Chief Economist at Markit said: “The US upturn has lost substantial momentum over the past two months, the trend in business activity sliding to the worst for over three years. “Slower service sector activity, combined with subdued manufacturing growth, means January’s expansion was the weakest seen since October 2012 with the sole exception of October 2013, when business was affected by the government shutdown. “Deteriorating financial market conditions, global growth uncertainties and the upcoming election are all taking their toll, not to mention the strong dollar, which is not only hurting manufacturing but is also hitting the service sector through reduced tourism and travel. “Payroll growth remained robust, but backlogs of uncompleted work have been falling in recent months, which usually means that such strong hiring is unlikely to persist unless demand picks up again in coming months. “While the first quarter may see a rebound in GDP due to technical factors such as an inventory adjustment and weather-related variations, the survey data paint a darker underlying picture of business conditions.” For further information, please contact: Markit Chris Williamson, Chief Economist Telephone +44-20-7260-2329 Email
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Ed Canaday, Corporate Communications Telephone +1 646 679 3031 Mobile +1 917 434 5075 Email:
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Joanna Vickers, Corporate Communications Telephone: +44-207-260-2234 Email:
[email protected] 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 percentage of positive responses plus a half of the percentage 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 Markit Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Founded in 2003, we employ approximately 4,000 people in 11 countries. Markit shares are listed on NASDAQ under the symbol MRKT. For more information, please see www.markit.com. 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.
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