Markit’s Preliminary Manufacturing Purchasing Managers’ Index Up Most In Five Months, Service Sector Index Down
MarketWatch reported that the preliminary manufacturing purchasing managers’ index from analytics firm Markit Economics has “unexpectedly” reached a five-month high in October. The so-called flash PMI rose to 54.0 from September’s final reading of 53.1, which had been close to a two-year low, MarketWatch said. Respondents to the survey chiefly “cited improving domestic demand and better pricing power” as the reasons for increased activity. However, global economic uncertainty as well as reduced spending within the energy sector continued acting “as brakes on activity.” Chris Williamson, chief economist for UK-based Markit, said the improved manufacturing environment “was perhaps best reflected in the rebound in job creation, which points to manufacturers having increased confidence that the current upturn will be sustained.” The Wall Street Journal reported that in contrast to its manufacturing purchasing managers data, which rose in October, Markit’s data for services purchasing managers declined to 54.4 for October from a final of 55.1 in September. This suggests overall uneven growth in the US economy. Business Insider reported that the services sector index was at its lowest point in nine months in October, and that Williamson said of this index, “The warning lights are also flashing brighter in relation to the outlook. Business optimism slipped to one of the lowest seen since the global financial crisis, and employment growth fell markedly in October.”
What This Means For Small Businesses
Though news that manufacturing demand rose in October is a welcome change from previous months’ declines in manufacturing growth, the sector remains very uneven. While the US economy as a whole has grown, albeit at a tepid pace, manufacturing remains sluggish, and there is vast room for improvement in the sector. Furthermore, news of a decline in service sector activity points to a potential weakening of the US economy as a whole. These data echo the NFIB’s latest Small Business Economic Trends survey. NFIB chief economist William Dunkelberg said of current economic conditions, “Only the strongest private sector can continue to produce growth in this environment. If we are growing at a 4 percent rate (second quarter), the strength isn’t coming from the small business sector.”
Additional Reading
NFIB previously reported on Markit’s manufacturing index.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
