Apr 5, 2016 - Markit U.S. Services PMI Business Activity Index. Source: Markit. ... latest reading was still the second-
News Release Purchasing Managers’ Index™ MARKET SENSITIVE INFORMATION th
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Markit U.S. Services PMI™ – final data (with composite PMI™) Business activity returns to expansion, but new order growth slips to post-crisis low Key points: Service sector output rises in March, following slight decline in previous month
in service sector output. Moreover, the average for the first quarter of 2016 (51.4) signalled the weakest expansion of business activity since Q3 2012.
New work expands at slowest rate seen in sixand-a-half year survey history Optimism about the business outlook also dips to a post-crisis low
Adjusted for seasonal influences, the final Markit U.S. Composite PMI™ Output Index registered 51.3 in March, up from 50.0 in February, to signal a return to growth for overall U.S. private sector activity.
Markit U.S. Services PMI Business Activity Index
However, the average index reading in Q1 2016 (51.5) was the weakest seen for any quarter since Q3 2012 (51.3). Markit U.S. Composite PMI™ Output Index
Source: Markit.
U.S. service providers signalled a modest rebound in business activity and robust employment growth during March. However, incoming new business expanded at the slowest pace since the survey began in October 2009, which also contributed to a fall in business confidence to a survey-record low. Meanwhile, input cost inflation remained subdued in March and prices changed by service sector companies increased at only a marginal pace.
Source: Markit, US. Bureau of Economic Analysis.
Survey respondents noted that subdued growth of incoming new work persisted in March. The latest expansion of new business volumes was only marginal and the weakest in six-and-a-half years of data collection. Anecdotal evidence suggested that uncertainty about the economic outlook and cautious spending patterns among clients continued to hold back new business growth across the service sector.
The seasonally adjusted final Markit U.S. Services Business Activity Index registered 51.3 in March, up from 49.7 in February and back above the crucial 50.0 no-change value. Nonetheless, the latest reading was still the second-lowest since October 2013 and pointed to only a marginal upturn Page 1 of 3
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Comment:
Softer growth of incoming new business resulted in another reduction in backlogs of work during March. Work-in-hand (but not yet completed) has now fallen for eight months running, which firms mainly linked to a lack of pressure on operating capacity at their business units. However, service providers boosted their payroll numbers, which continued the upward trend seen in each month since March 2010. Companies that reported a rise in their staffing levels mainly commented on the launch of new products and long-term business expansion plans.
Commenting on the PMI data, Chris Williamson, Chief Economist at Markit said: “The welcome news of sustained robust hiring in March, as indicated by both the PMI surveys and non-farm payroll numbers, masks a more worrying picture of a further slowing in economic growth so far this year. “The survey data, which have historically provided a reliable guide to official GDP numbers, suggest the annualized pace of economic growth weakened to 0.7% in the first quarter.
Meanwhile, input cost inflation remained subdued across the service sector in March. Survey respondents noted that lower fuel prices had helped to offset higher costs elsewhere, particularly staff salaries. At the same time, average prices charged by service providers increased only marginally, reflecting strong competition for new work and slower cost inflation than in February.
“Demand is growing at the slowest rate since late2009 and, with business optimism also sliding to its weakest since the recession, firms clearly expect worse to come. Firms are worried about a potential weakening of demand both at home and abroad in the face of various headwinds. As such, the data support the cautious approach to policy tightening currently advocated by Fed Chair Janet Yellen.”
Service providers indicated sustained optimism (on balance) about the year-ahead business outlook in March. However, the degree of positive sentiment moderated for the second month running and was the lowest since the survey began in late-2009, reflecting heightened economic uncertainty and softer new business growth in recent months.
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For further information, please contact: Markit Chris Williamson, Chief Economist Telephone +44-20-7260-2329 Email
[email protected]
Ed Canaday, Corporate Communications Telephone +1 646 679 3031 Mobile +1 917 434 5075 Email:
[email protected]
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.
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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.
The intellectual property rights to the U.S. Services PMI™ provided herein are owned by or licensed to Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. 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 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. Markit is a registered trade mark of Markit Group Limited.
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