Economy

Economic Data Roundup (12/20/2016)

12/20/16 12:00 PM

iStock_000009946822_Small.jpgThe purchasing managers’ index (PMI) from IHS Markit for the U.S. services sector, which accounts for a much larger portion of the overall economy than manufacturing, fell to 53.4 during the first half of December. That was worse than expected and the lowest reading since September, although Q4 is still on track for the steepest upturn in services sector output in a year. The slight decline in the headline index this month was due to greater cost pressures (inflation) and a pullback in the expansion of new work. However, surveyed managers said that new business growth is still being supported by “improving domestic economic conditions and a general upturn in willingness to spend among clients.” Increased pressures on operating capacity caused more firms to boost their hiring this month, which together with the uptick in input prices suggests that margins were further strained in December. Looking ahead, service providers this month reported a strong degree of optimism regarding business conditions in 2017, and Chris Williamson, chief economist at IHS Markit, added that “With the new year bringing a change of government and a shift in emphasis towards fiscal stimulus, economic growth and the labor market look set to strengthen further in 2017. We expect GDP growth to accelerate to a steady but unexciting 2.3% in 2017, accompanied by three further quarter point rate hikes by the Fed.”

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Sources: Econoday, Bloomberg, ZH, IHS Markit

Post author: Charles Couch