Technology, Consumer Goods Drive U.S. Economic Growth

The U.S. economy grew as a whole in March, led by increases in output for the technology, consumer goods, consumer services and healthcare sectors.

Following stagnation in February, Markit Economics’ Purchasing Managers’ Index (PMI) had a reading of 51.3 in March. Growth in the technology sector was at a 10-month high in March, following a survey-record decline in February, driven by higher new orders. Consumer services showed the second-best growth, followed by healthcare and consumer goods, which nevertheless saw the weakest risk in output in almost two-and-a-half years, Markit said.

Meanwhile, basic materials, financials and industrials all saw output declines in March. Industrials output was the weakest of the sectors in March, reporting its fastest drop since data collection began in October 2009 and with the weakest performance of the sectors for the first quarter of 2016, Markit said.

In Europe, the beverages sector led the pack—in March and for the first quarter—in Markit’s Europe Sector PMI, marking the biggest monthly output rise since September 2000, the firm found. The software and services sector rose second fastest with the strongest activity reported since September 2015.

Construction materials was the second-best performing sector for the first quarter of 2016, despite a growth slowdown in March, Markit said.

The metals and mining sector saw contraction in two out of the first three months of the year and was the only sector in March to post a quarterly average below the 50.0 mark, the firm said.

In Asia, the commercial and professional services sector had the top performance in the March Nikkei Asia Sector PMI, as well as the strongest sector performance of the first quarter, Markit found in a separate report. The Asian banks, software and services, beverages and food and machinery and equipment sectors all posted growth in March, while the insurance and pharmaceuticals and biotechnology sectors saw gains in March following contraction in February.

Asian metals and mining, which was the worst-performing sector during the last quarter of 2015, reported one of the quickest rebounds to record growth in March, Markit said.

On the other hand, forestry and paper products reported the worst growth in March, while transportation, real estate, healthcare services and technology equipment also saw contraction.

“Overall, business activity growth was recorded by ten of the 19 detailed sectors covered, up from only seven during February,” Markit said.

- Nicholas Stern, NACM editorial associate

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