News Release - Markit Economics

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Jan 5, 2017 - business activity at the end of 2016. ... PMI which tracks business trends across both the manufacturing a
News Release

Purchasing Managers’ Index™ MARKET SENSITIVE INFORMATION th

EMBARGOED UNTIL: 0945 (EST) / 1445 (UTC) January 5 2017

Markit U.S. Services PMI™ – final data (with composite PMI™) Job creation accelerates to its fastest since September 2015 Key findings: Robust rise in service sector payrolls

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solid pace of expansion. Moreover, the average reading during the final quarter of 2016 (54.4) was the strongest since Q4 2015.

Solid rates of activity and new business growth in December Prices charged increase at sharpest rate for 18 months

Data collected December 6-19

Service sector business activity (seasonally adjusted)

Survey respondents noted that improving domestic economic conditions and greater consumer spending were factors supporting higher levels of business activity at the end of 2016. Reflecting this, latest data indicated that growth of new work remained close to the 12-month peak seen in November. Increased volumes of new business contributed to renewed pressures on operating capacity, although the rate of backlog accumulation was only marginal in December. Service providers reported a robust and accelerated upturn in payroll numbers at the end of the year. The rate of job creation was the fastest since late-2015, which survey respondents linked to ongoing expansion plans and rising confidence regarding the business outlook.

Source: IHS Markit.

December data highlighted a sustained upturn in business activity and incoming new work across the U.S. service sector. Greater workloads and improved confidence towards the business outlook in turn contributed to the fastest rise in payroll numbers since September 2015. However, the latest survey indicated that inflationary pressures pricked up again in December, with prices charged by service providers increasing at the steepest pace for one-and-a-half years. At 53.9 in December, the seasonally adjusted Markit final U.S. Services Business Activity Index dropped from 54.6 in November to signal the slowest upturn in service sector activity for three months. Nonetheless, the latest reading was well above the neutral 50.0 threshold and pointed to a

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December data signalled a further rebound in business optimism from the post-crisis low seen in June, and the latest reading was one of the highest recorded since the summer of 2015. Anecdotal evidence mainly cited expectations of a sustained domestic economic recovery over the course of 2017. Some firms also commented on hopes of a boost to business conditions following the presidential election. Meanwhile, input cost inflation accelerated in December and was the joint-fastest since July 2015. Reports from survey respondents suggested that suppliers had passed on higher fuel and raw material prices. A number of firms also pointed to increased food costs. Latest data indicated a solid rise in average prices charged by service providers and the rate of inflation was the steepest recorded since June 2015. Markit Final U.S. Composite PMI™ The seasonally adjusted final Markit U.S. Composite PMI™ Output Index registered 54.1 in December, down slightly from 54.9 in November but above the 50.0 no-change mark for the tenth

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News Release

Markit Composite PMI and U.S. GDP

consecutive month. Moreover, the average reading for the final quarter of 2016 (54.6) was the strongest since Q4 2015. 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: “The US economy ended 2016 on a solid footing on which sustained growth looks set to be achieved in the coming year. Sources: IHS Markit, U.S. Bureau of Economic Analysis.

“Although losing a little momentum in December, the pace of business activity growth in the services and manufacturing sectors combined remained one of the strongest seen over the past year. “The surveys signal GDP annualized growth of approximately 2.0% in the fourth quarter, a pace which we expect to be met – if not slightly exceeded – through 2017. “The upturn also continues to deliver an impressive rate of job creation, especially given the current high level of employment – largely reflecting improved confidence about the economic outlook. “The only real blot on the copybook was that prices charged showed the steepest rise for one and a half years, which could feed through to reduced consumption. “The upturn in price pressures alongside the robust economic growth signalled will also add conviction to the belief that, unlike 2015 and 2016, this year will see that Fed deliver more than one rate hike, with three quarter point interest rate rises looking the most likely scenario.” -Ends-

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 2017

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 © 2017 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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