Services PMI - Markit Economics

2 downloads 205 Views 249KB Size Report
May 4, 2016 - Markit U.S. Services PMI™ – final data (with composite PMI™). Service sector activity growth ... fra
News Release Purchasing Managers’ Index™ MARKET SENSITIVE INFORMATION th

EMBARGOED UNTIL: 0945 (EDT) / 1345 (UTC) May 4 2016

Markit U.S. Services PMI™ – final data (with composite PMI™) Service sector activity growth accelerates to a three-month high Key points:  Business activity continues to rebound in April

growth exceeded the average seen in the first quarter of 2016 (51.4), the headline index remained weaker than its post-crisis trend (55.6).

 New work rises at modest pace, but employment growth weakens  Input cost inflation picks up to its fastest since August 2015

The final seasonally adjusted Markit U.S. Composite PMI™ Output Index picked up to 52.4 in April, from 51.3 in March, thereby signalling the fastest expansion of private sector output since January.

Markit U.S. Services PMI Business Activity Index

Stronger growth of service sector business activity (index at 52.8, up from 51.3 in March) contrasted with the weakest increase in U.S. manufacturing production for just over five-and-a-half years (index at 50.3 in April, down from 51.2). Markit U.S. Composite PMI™ Output Index

Source: Markit.

April data highlighted a sustained recovery in overall business conditions across the U.S. service sector, led by faster growth of activity and incoming new work. However, the rate of job creation slipped down to its weakest so far in 2016 amid a lack of pressure on operating capacity and subdued confidence regarding the business outlook. At the same time, squeezed pricing power remained evident in April, with average tariffs broadly unchanged despite input cost inflation accelerating to its fastest since August 2015.

Source: Markit, US. Bureau of Economic Analysis.

Service providers mainly attributed the recent recovery in business activity to gradually improving client demand during April. Reflecting this, latest data indicated a modest rebound in new business growth from the survey-record low recorded in March. Anecdotal evidence suggested that uncertainty about the economic outlook was a key factor weighing on new order books at the start of the second quarter.

At 52.8 in April, up from 51.3 in March, the seasonally adjusted final Markit U.S. Services Business Activity Index remained above the neutral 50.0 value for the second month running. The latest reading was the highest since January and signalled a moderate expansion of service sector business activity. While the rate of output Page 1 of 3

The © Markit

latest

survey

highlighted

that

business

Comment:

confidence across the service economy was up fractionally in comparison to March, but still close to the lowest seen since the survey began in October 2009. Some survey respondents suggested that the presidential election season and heightened economic uncertainty had dampened the near-term growth outlook for their business units.

Commenting on the PMI data, Chris Williamson, Chief Economist at Markit said: “The PMI surveys show the economy continuing to pick itself up after the stagnation seen in February, with growth accelerating for a second successive month in April. However, the rate of expansion remains tepid, reliant on sluggish growth in services as manufacturers report a stalling of production.

In contrast to the trend recorded for business activity and new work, the latest survey pointed to softer job creation at service sector companies. Moreover, the rate of employment growth was the weakest seen since December 2015. A slower rise in payroll numbers partly reflected an ongoing lack of pressure on operating capacity. Backlogs of work declined for the ninth consecutive month, which is the longest continuous period of depletion since the survey began in late-2009.

“The surveys are consistent with economic growth picking up from the 0.5% seen in the first quarter to a mere 1.0% at the start of the second quarter, suggesting the bounce-back from the weak start to the year is far from impressive. “The fragility of growth is highlighted by inflows of new business rising at a rate only marginally above the post-recession low seen in March, and optimism about the year ahead also remains close to a post-recession low.

Service providers registered a renewed acceleration in input price inflation during April. Although only modest, the latest increase in average cost burdens was the fastest for eight months. However, average prices charged by service firms were broadly unchanged in April, which suggested further pressure on operating margins across the sector.

“The drop in confidence seen so far this year is beginning to hit the labour market, with the survey signalling 160,000 extra jobs being created in April, down from an average of 200,000 in the first three months of the year.” - Ends -

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. Page 2 of 3

© Markit

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.

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.

Page 3 of 3

© Markit