News Release - Markit Economics

News Release

Purchasing Managers’ Index™ MARKET SENSITIVE INFORMATION th

EMBARGOED UNTIL: 0945 (EDT) / 1345 (UTC) June 5 2017

IHS Markit U.S. Services PMI™ – final data (with composite PMI™) New business growth accelerates in May Key findings: New business grows at fastest pace since January

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Business activity continues to expand at solid rate Job creation accelerates to three-month high

Data collected May 12-25

Service sector business activity (seasonally adjusted)

The seasonally adjusted Business Activity Index continued to run above the crucial 50.0 no-change mark during May. A reading of 53.6, up from 53.1 in April, signalled the largest rise in overall activity since February. The rate of growth in new business meanwhile accelerated from April to a four-month high. Panellists noted that stronger demand from new and existing clients led to increased volumes of new orders. Anecdotal evidence stated that the expansion in new business had a knock-on effect on the level of outstanding work reported by service providers. For the first time since January, backlogs increased during May. The pace of accumulation, though moderate, was the strongest since last October. The trend of job creation, which began in March 2010, was extended in May. The rate of payroll expansion accelerated to a three-month high. Panellists commonly attributed the rise in staffing levels to new projects and higher overall business activity.

Source: IHS Markit.

Growth of business activity in the US service sector accelerated slightly in May, reaching a three-month high. This extended the current period of activity growth to 15 months. New business also expanded at a quicker pace, and grew at the fastest rate since January. Subsequently, firms added to their payrolls again with the rate of growth accelerating to a three-month high. Input price inflation softened fractionally, while prices charged by US service providers increased at a faster pace.

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On the price front, the rate of input price inflation softened fractionally from April’s 21-month high. The pace of increase was broadly in line with the series average. Anecdotal evidence generally associated increased cost burdens to higher prices for goods purchased, as well as wage rises. Panellists noted that higher input costs were generally passed on to clients. Output prices consequently rose for the fifteenth consecutive month, with the pace of charge inflation accelerating from April. The rate of increase was the second-fastest in the current sequence. The degree of confidence among service providers remained positive, but relatively subdued, in May. Despite some respondents linking optimism to strong underlying demand, others were more cautious regarding future business activity.

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News Release

IHS Markit Final U.S. Composite PMI™

IHS Markit Composite PMI and U.S. GDP

The final seasonally adjusted IHS Markit U.S. Composite PMI™ Output Index rose to 53.6 in May, up from the previous month’s reading of 53.2. Although the rate of growth in both sectors was relatively subdued, the trend for the first five months of 2017 is stronger than the same period in 2016. Similar rates of expansion were seen in the manufacturing and service sectors, albeit with service providers experiencing a fractionally quicker acceleration than goods producers. However, growth rates remained relatively muted. The composite index is based on original survey data from the IHS Markit U.S. Services PMI and the IHS Markit U.S. Manufacturing PMI. Sources: IHS Markit, U.S. Bureau of Economic Analysis.

Comment Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: “Although service sector business activity picked up in May, the PMI surveys for manufacturing and services collectively indicate only a modest pace of economic growth so far in the second quarter. “Historical comparisons with GDP indicate the PMI is signalling second quarter GDP growth of just over 2%, suggesting there may be some downside risks to IHS Markit’s current forecast of a GDP growth rebound to just over 3% in the second quarter. “However, the key message from the PMI is that the economy is enjoying steady, albeit unspectacular, growth, and that the pace of expansion has been slowly lifting higher in recent months. “Hiring meanwhile remains on a firm footing, with the survey’s employment indicators running at levels consistent with around 160,000 jobs added to the economy in May. “In another sign of the economy’s underlying steady expansion, average prices charged for goods and services is running at the second highest in almost two years, indicating that rising demand is helping restore some pricing power.” -Ends-


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For further information, please contact: IHS Markit Chris Williamson, Chief Economist Telephone +44-207 260 2329 Email [email protected] Joanna Vickers, Corporate Communications Telephone +44-207 260 2234 E-mail [email protected] Note to Editors: The U.S. Services PMI™ (Purchasing Managers’ Index™) is produced by IHS Markit and is based on original survey data collected from a representative panel of over 400 companies based in the U.S. service sector. IHS 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 IHS Markit U.S. Services PMI complements the IHS Markit U.S. Manufacturing PMI and enables the production of the IHS 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. IHS 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 IHS 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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