Last week saw mixed messages on Manufacturing (ISM down, PMI up), and Services was even more so (ISM surged, PMI down).
- Markit PMI Manufacturing – 3 year high
- Markit PMI Services – 9-month low
- ISM Manufacturing – fading from multi-year high
- ISM Services – highest since Aug 2005
Take your pick – 13-year high or 9-month low?
Overall the Composite US PMI dropped to its lowest since May 2017, down 3 months straight signaling an unimpressive 2-to-2.5% GDP growth…
Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“A slowdown in the service sector comes as a disappointment, though was partially offset by faster manufacturing growth during the month. Combined, the two PMI surveys point to the economy expanding at a reasonably solid, albeit not exciting, 2-2.5% annualised rate at the start of the first quarter.
“Beneath the headline numbers, the survey findings are more encouraging, and suggest the pace of economic growth could accelerate in coming months. Most importantly, growth of new orders jumped higher in both sectors in January, registering the largest upturn in new work since last August and one of the biggest gains seen over the past three years.
“Back orders also showed the biggest rise for almost three years as firms struggled to cope with rising demand.
“This upturn in client demand was a key factor behind another month of strong hiring, but also encouraged firms to hike prices. Selling price inflation accelerated in both manufacturing and services as pricing power continued to return.”
And ISM soared to 13-year highs. topping all forecasts. Under the covers, ISM was incredible:
- Employment gauge rose to 61.6, the strongest in records to July 1997, from 56.3
- Measure of new orders surged to a seven-year high of 62.7 last month from 54.5
The month-over-month advance in orders was the second-biggest in data going back to mid-1997 and suggests businesses are responding to the passage of tax-cut legislation and boosting capital spending. What’s more, a gauge of export orders edged up to a three-month high as global economic growth picks up.
Confused? That’s the goal!
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