U.S. Manufacturing and Service Sectors Show Diverse Trends

The flash Purchase Managers’ Index (PMI) for the United States indicates a rebound in its manufacturing sector, but a slowdown in its service sector, according to data from Markit. The latest reading suggests that that manufacturing will increase from 53.1 in September to 54 in October, and service will drop from 55.1 to 54.4.

Robust and accelerated expansion of productions levels were noted across the manufacturing sector. Business conditions have seen the sharpest improvement since May, and output and new order volumes experienced the fastest rise in October.

Chris Williamson, chief economist at Markit, said October’s flash manufacturing PMI brought welcomed signs of stronger growth at the start of the fourth quarter. “The faster growth of export sales is particularly good news and will help to alleviate fears that the U.S. economy is being hurt by the strong dollar and slower growth in China,” Williamson said.

The U.S. service sector, however, is experiencing the slowest expansion of business activity since January—an estimate based on 85% of the usual monthly replies. The index also points out that the sector has experienced the weakest rise in payroll numbers since February, and business confidence is only slightly higher than the three-year low recorded in July.

“With the survey also finding price pressures to have remained subdued, especially in terms of wages, the sharper than expected slowdown in October will add to calls for policymakers to delay hiking interest rates until the economy finds a firm footing,” Williamson added.

- Jennifer Lehman, NACM marketing and communications associate

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