Economic Data Roundup (12/05/2016)

12/5/16 12:00 PM

iStock_000009946822_Small.jpgTwo encouraging reports on U.S. services sector activity were released this morning. First, the services sector purchasing managers' index (PMI) from IHS Markit ended November at 54.6, a slight decline from October but still one of the highest readings of 2016 and the 9th expansionary (+50) print in a row. Under the hood, new business growth accelerated to a 12-month high, which surveyed managers attributed to “the launch of new projects and generally improving demand patterns.” The rate of job creation also rose in November, climbing to its strongest reading since July, albeit still below the recovery average. This boost to capacity contributed to the first reduction in order backlogs in five months. Looking ahead, managers reported upbeat outlooks for their growth prospects over the next year. Even more encouraging was the Institute for Supply Management’s (ISM’s) non-manufacturing index, which jumped to 57.2 in November. That was much better than economists expected and the highest reading in a year. Measures of production, employment, and foreign trade all improved last month, and Markit's chief economist Chris Williamson added that “The solid business survey readings not only add to the widely held view that the Fed is near certain to raise interest rates at its December meeting, but also raise the prospect of more aggressive than previously anticipated interest rate hikes in 2017.” Below are a few comments from surveyed managers:

  • “We had almost [a] 9 percent jump month-over-month on active, secured projects in our variable side of business. We also acquired new customers in [the] past two months.” (Construction)
  • “Looking to close out Q4 with no significant changes positive or negative. Profits overall have been above projections.” (Finance & Insurance)
  • “Our health plan business still continues to struggle with rising costs under Obamacare, which is causing the whole company to experience cost pressures.” (Health Care & Social Assistance)
  • “Outlook for Q1 2017 is looking favorable with Q4 2016 ending as projected, perhaps slightly lower.” (Professional, Scientific & Technical Services)
  • “Increased sales for [the] holidays.” (Retail Trade)





Sources: Econoday, Bloomberg, Twitter, ZH, IHS Markit, ISM, FRBSL

Post author: Charles Couch