After falling modestly in November, Markit's preliminary December Manufacturing and Services PMI were both expected to rebound (even as US macro surprise data started to disappoint), but the analysts were wrong.
Markit US Manufacturing PMI dropped from 58.3 to 57.8 (below 58.5 exp) - a 12 month low
Markit US Services PMI dropped from 58.0 to 57.5 (below 58.8 exp) - a 3 month low
That is the second straight monthly decline...
Inflationary pressures continued to mount, with firms facing ever increasing input prices. The pace of cost inflation accelerated again to reach a fresh series record. Companies reported broad-based upticks in cost burdens, with a range of key materials noted higher in price, alongside soaring transportation and distribution fees.
The US Composite PMI Output Index posted 56.9 in December, down slightly from 57.2 in November.
Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said:
“The survey data paint a picture of an economy showing encouraging resilience to rising virus infection rates and worries over the Omicron variant. Business growth slipped only slightly during the month and held up especially well in the vulnerable service sector. Manufacturing output growth even picked up slightly amid a marked easing in the number of supply chain delays, which also helped to take pressure off raw material prices. Barring the initial price slide seen at the start of the pandemic, December saw the steepest fall in factory input price inflation for nearly a decade.
“The worry is that rising wage growth, greater transport costs and higher energy prices have pushed service sector cost inflation to a new high, and that any renewed disruption to global supply lines resulting from the Omicron wave could lead to renewed upward pressure on goods prices.”
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