On the heels of the major rebound in Manufacturing PMI data, the final US Services PMI for October printed 54.8 – the highest since Nov 2015 – following the massive spike in ISM Services in September (which reverted lower to match the PMI at 54.8). However, more signs of stagflation appear as business activity faded but prices paid soared as Markit notes, “employment growth across the services and manufacturing sectors remained one of the weakest seen for over three years.”
Despite signs of renewed pressure on operating capacity, job creation picked up only slightly from September’s three-and-a-half year low. Some firms cited cautious hiring strategies in response to heightened uncertainty about the business outlook. Furthermore, service providers signalled a much sharper pace of input cost inflation than the 19-month low recorded in September. The latest rise in average cost burdens was the fastest since July 2015.
Full ISM Breakdown:
- Business activity fell to 57.7 vs 60.3 prior month
- New orders fell to 57.7 vs 60.0
- Employment fell to 53.1 vs 57.2
- Supplier deliveries fell to 50.5 vs 51.0
- Inventory change rose to 52.0 vs 51.5
- Prices paid rose to 56.6 vs 54.0
- Backlog of orders unchanged at 52.0
- New export orders fell to 55.5 vs 56.5
- Imports rose to 53.0 vs 51.0
- Inventory sentiment fell to 62.0 vs 64.5
Once again pointing to stagflationary pressures.
Overall the Markit Composite US PMI suggests a healthy rebound in growth…
Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“Indications of stronger economic growth, solid job creation, rising prices and improved business confidence all pave the way for the Fed to hike interest rates again by the end of the year.
“The surveys are signalling the largest monthly rise in business activity for nearly one year after inflows of new orders surged higher in October.
“The upturn in new work helped drive renewed optimism about prospects for the year ahead. However, it’s evident that many businesses remain cautious as the presidential election nears. As a result, employment growth across the services and manufacturing sectors remained one of the weakest seen for over three years, though still signals a respectable 130,000 rise in non-farm payrolls in October.
“There’s therefore nothing in this month’s PMI reports to deter the Fed from raising interest rates again, with a move likely to be seen in December.”
Time for a hike Janet!
The post US Services Economy Slips From August Spike: “Employment Growth Remains Weakest In 3 Years” appeared first on crude-oil.top.