US PMI surveys signal weakest growth for six months
Having correctly indicated that the economy grew at an annualised rate of 3.5% in the third quarter, the PMI surveys warn of a slowdown as we move towards the end of the year.
The manufacturing and services surveys collectively indicated the slowest pace of expansion for six months in October and, with inflows of new business also hitting a six-month low, there's good reason to believe that the pace of growth could slacken further in coming months.
The seasonally adjusted final Markit U.S. Composite PMI" Output Index (covering manufacturing and services) registered 57.2 in October, down from 59.0 in September and the lowest reading for six months.
The October survey data are running at a level consistent with GDP rising at an annualised rate of 2.5% at the start of the fourth quarter, but any further drop in the PMI numbers raises the risk of an even sharper slowdown.
However, although cooling, the pace of expansion clearly remains sufficiently strong to generate an impressive rate of job creation. The surveys are signalling another month of non-farm payroll growth in excess of 200,000 in October. The concern is that, with growth slowing and business confidence sliding to one of the lowest levels seen over the past two years, employers could soon start to show greater hesitancy in recruiting new staff.
Employment
Chris Williamson | Chief Business Economist, IHS Markit
Tel: +44 20 7260 2329
chris.williamson@ihsmarkit.com