US Services Economy Slumps To 15-Month Low, Manufacturing Rebounds

Despite a resurgence in positve surprises in hard macro data, PMIs (and soft survey data) has been fading in recent months and Markit's preliminary December showed a notable divergence in the US economy as Manufacturing rebounded to 2017 highs and Servces slumped to 15-month lows.

Higher prices for raw materials resulted in the strongest rate of input cost inflation since December 2012. There were signs that manufacturers had absorbed part of the rise in average cost burdens, as highlighted by a slower increase in factory gate charges in December.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“The flash PMI surveys brought a mixed bag of news. While manufacturing is ending 2017 with the wind it its sails, the service sector is struggling in the doldrums by comparison.

 

“In manufacturing, faster output and order book growth encouraged firms to add factory workers at the fastest rate for over three years, painting a bright picture of the goods-producing sector expanding capacity in response to resurgent demand.

 

“In contrast, service sector activity grew at its weakest rate for over a year, taking job creation to its lowest since May.

 

“Similar divergences were seen in relation to future growth, with business expectations picking up in manufacturing to a near-two-year high but waning markedly in services to the lowest for one and a half years.

 

“With services representing a far greater portion of the economy than manufacturing, the overall picture is therefore one of the manufacturing sector’s exuberance being overshadowed by the gloomier service sector.

Most worrisome for the 3%-growth crowd is the tumble in the Compoisite PMI to 9-month lows - signaling notably below trend growth...

“Measured overall, the surveys point to the economy growing at a modest annualised rate of just over 2% in the fourth quarter.”

Comments

MK ULTRA Alpha Silver Savior Thu, 12/14/2017 - 11:34 Permalink

Obama started a race war and worked to divide our nation. He was also for open borders and bring in as many people of color economic refugees to make in his words, a nation of color. Again, Obama was anti-White and anti-American. He was the most destructive force for this nation in my over 60 years of life.

Right now, their is a low intensity race war and the media works to stir it up and divide the nation. America doesn't work anymore and needs to be divided up. The federal government has done incredible damage depending who gets control. It is a massive totalitarian police state and we are slaves of a system of LIES.

In reply to by Silver Savior

LawsofPhysics Thu, 12/14/2017 - 10:21 Permalink

Are we talking about the manufacturing of something real?  You know somthing that requires real work (energy) and real resources or are we talking about bullshit paper/digital "manufacturing", as in the manufacturing of financial "products" like mortage backed securities?All the while the fuckers in banking and finance get access to all the money they want with no real risk, no real work, and no real collateral requirements!"Full Faith and Credit" 

Silver Savior Thu, 12/14/2017 - 10:35 Permalink

I think it's not about jobs. It's all about trying to get away from jobs and being self sustaining. And I don't mean taking on massive risks in opening a business. I mean living off asset classes.

MK ULTRA Alpha Thu, 12/14/2017 - 11:14 Permalink

Service sector economy indicates a recession economy, but manufacturing rebounds. It is because of the massive increase in defense spending. The money isn't being used for war this time, it's being used to manufacture for the military. Trump vote was a vote against Clinton, not for his social engineering agenda. Each president has a social engineering agenda, they're not suppose to be telling us how to live our lives. Another good point, the deficit is being clocked at $1.2 trillion. Trump believes by cutting social services and the tax cut, the deficit will not be $1.2 trillion. It's a miscalculation. Social services is just $150 billion and the tax cut will take years to bring back the economy. Trump doesn't have the sense to cut the federal government, like the 200,000 contractors for the 17 intelligence agencies. What Trump is doing is adding more layers of control with a new Trump private contractor intelligence service. And the Pentagon and intelligence agencies are adding more workers.

The federal government is a bloated inefficient system of lazy federal workers with low IQ and poor work ethics. Most of this nation's problems are directly related to federal workers out of control. When lower social economic class workers migrate to federal government work, they were no body and now they're somebody. Always through history, when lower social economic people get control they abuse and usurp their authority. No longer do the courts work for Americans, and no longer is America a republic or a democracy, it is an empire and all empires fall. The only way out on all counts is a huge RIF reduction in force of federal workers and contractors. The slow attrition Trump plan is not working and 500,000 workers and their contractors need to be terminated now. Entire agencies needs to be abolished, redundant because states do the same function, mission creep and many functions like from the 1800's are obsolete.

Watch as the deficit eats Trump alive and they will avoid doing what needs to be done.