After a mixed bag on the manufacturing side of the US economy (ISM down, PMI up), Markit and ISM report their Services sector surveys today and were expected to both show declines. However, both Services surveys beat expectations.

• Markit US Manufacturing up to 59.2, Beat expectations
• Markit US Services up to 58.3, Beat expectations
• ISM US Manufacturing down to 58.7, Missed expectations
• ISM US Services up to 58.7, Beat expectations

Source: Bloomberg

And this mixed bag is coming as hard data continues to slump…

Source: Bloomberg

Despite a faster rise in new business, a number of firms reported sufficient capacity to process incoming new work in January.

As a result, companies increased workforce numbers only marginally, and at the slowest pace since July 2020.

The IHS Markit Composite PMI Output Index posted 58.7 in January, up from 55.3 in December, to signal the quickest rise in private sector business activity since March 2015, and the best PMI in the world’s major economies for now (as the rest of the world slows).

Source: Bloomberg

Commenting on the latest survey results, Chris Williamson, Chief Business Economist at IHS Markit, said:

“A strong start to the year for manufacturing was accompanied by a marked upturn in the service sector, driving business activity growth to the fastest rate for almost six years during January. The improving data set the scene for a strong first quarter, and a rise in business expectations for the year ahead bodes well for the recovery to gain traction as the year proceeds. Companies have become increasingly upbeat amid news of vaccine roll-outs and hopes of further stimulus.

The downside is that prices have risen sharply.

“Deteriorating vendor performance and supplier prices hikes led to the steepest rise in cost burdens since data collection began in October 2009. “

As a result, private sector output charges increased significantly at the start of 2021.