Following mixed European PMI data (Services up, Manufacturing down), and a divergent December in the US, January flash PMIs show that divergence is expanding with Services slumping to 9-mo lows and Manufacturing up at 12-mo highs.
This shift has sparked weakness overall with the Composite PMI sliding to its lowest since May 2017...signaling GDP growth way below the 3% hopes.
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“January saw an encouraging start to the year for the US economy. Business activity across the manufacturing and service sectors continued to expand, driving further job gains as companies expanded capacity. Manufacturing is faring especially well, in part thanks to the weaker dollar, providing an important spur to the economy at the start of the year.
“Although the overall pace of economic growth signalled by the surveys waned to an eight-month low, the forward-looking indicators suggest the slowdown will prove transitory. In particular, business optimism about the year ahead improved markedly and inflows of new orders hit a five-month high. Growth should therefore pick up again in coming months.
“Inflationary pressures meanwhile kicked higher, with January seeing the second-largest monthly increase in input costs since 2015. Higher oil prices were widely reported but, more generally, stronger demand is also helping companies push through price hikes.”
Some notable sliver-lining-seeking going on in those comments.