The US Manufacturing economy continues to languish near one-year lows (in line with the collapse in 'hard data' in recent months) but US Services are soaring to their highest level since April 2015.
Manufacturing was ugly across the board...
Weaker increases in both output and new orders were key factors weighing on the headline manufacturing PMI in the latest survey period. Production volumes expanded at the slowest rate for 14 months in August, while new business growth weakened from July’s four-month high. Consequently, purchasing activity rose at a softer pace while firms also registered slower increases in inventory levels. Latest data signalled a further pick up in the rate of input price inflation at US goods producers.
But everything is anecdotally awesome in Services-land...
According to anecdotal evidence, strong economic conditions and an improvement in client demand had driven the latest upturn in activity. The latter was highlighted by a sharp and accelerated rise in new business received by services companies, with the rate of new order growth reaching a 25-month high in August. Greater intakes of new work and rising activity levels led firms to hire more staff in August.
Judging by the collapse in 'real' economic data, we suspect manufacturing survey respondents are on to something...
Commenting on the flash PMI data, Rob Dobson, Director at IHS Markit said:
“The US economic growth story remained a tale of two sectors in August. The overall rate of expansion accelerated to a 27-month record, driven higher by strong and improved growth of business activity in the vast services economy. In contrast, the performance of manufacturing remained sluggish in comparison, with production volumes rising to the weakest extent in over a year.
“Nonetheless, the acceleration signaled for the economy as a whole suggests that GDP growth is still gaining momentum during the third quarter. With new order inflows also strengthening and job creation equalling its best pace in the year-to-date, economic growth should remain on course to outperform relative to the second quarter.
“The principal weak spot in the economy placing downside risk on that outcome remains exports. Foreign goods orders fell – albeit only marginally – for the second month in a row, often blamed on the strength of the dollar. The domestic demand picture should hopefully remain relatively bright to offset such risks, however.”
Is GDP hope driving surveys?