Sep 28, 2016
The US services sector showed acceleration in September, according to Markit’s flash survey. The preliminary Services PMI Index registered 51.9, up from the August reading of 51 and was higher than the 51.1 analysts were looking for, according to a Thomson Reuters survey.
It was the strongest monthly rise since April, but the rate of growth backed off to a 4-month low.
Despite an improving headline number, business optimism in the services industry dipped during the month to its lowest level on record, which was recorded in June. Industry respondents still see a rise in activity, though, over the next year.
According to the report, weaker growth in new business weighed on employment growth. Staffing levels are continuing to grow, but September showed the slowest increase since March 2013.
The Markit Composite PMI, which combines the manufacturing and services sectors, moved higher to 52 from 51.5 in August.
Markit chief economist, Chris Williamson said, “The service sector sent mixed signals in September, with faster growth of activity during the month offset by gloomy forward-looking indicators. Although business activity showed the largest monthly rise since April, inflows of new business slowed and employment growth was the weakest for three-and-a-half years. A drop in optimism about the year ahead to a near post-crisis low meanwhile cast a shadow over the outlook.”
He further added by saying the combined services and manufacturing surveys suggest the economy is growing at an annualized rate of only around 1% during Q3.
Stocks are rallying on the data. The S&P 500 is higher by about 40 bps to 2,154 at the time of this writing after trading flat prior to the release. The ICE US Dollar index is slipping following the data, but remains elevated on the day by about 20 bps to 95.50. December gold is lower by about 1% to $1,331 per ounce. $1,366, while November WTI crude oil is lower by 2.5% to $44.78.