US Services PMI Jumps To 5-Month Highs But Outlook Plummets

After a dip in Manufacturing PMI (and plunge in ISM Manufacturing), analysts expected the final December print for Services to hold at its highest since July.

As US Macro data has serially disappointed, PMI’s Services survey instead accelerated further in December to 52.8 (from 52.2 flash and 51.6 in November).

Source: Bloomberg

Commenting on the latest survey results, Chris Williamson, Chief Business Economist at IHS Markit, said:

“Business activity in the vast service sector picked up pace at the end of last year as rising domestic demand and signs of reviving exports led to higher workloads. Combined with indications of manufacturing lifting out of it’s recent lull, the survey data suggest the overall pace of economic growth accelerated to its fastest since last April.

“The missing ingredient compared to this time last year is optimism about the future, with business sentiment regarding prospects for the next twelve months running well below levels seen this time last year, and close to the lowest for at least seven years. Indeed, much of the recent improvement in demand has come from stronger sales to consumers, with business spending and investment remaining under pressure amid this anxiety about the economic and political outlook.”

However, as Williamson notes, while moving in the right direction, “service sector growth remains well below that seen in the early months of 2019, and the overall survey results are indicative of GDP rising at a relatively modest annual rate of 1.8% in December.“