As Europe Slumps, US PMIs Signal GDP Growth Above 3.00%

Following across the board disappointments in Europe, February (flash) US PMIs surprised to the upside with the composite data at its highest since Nov 2015.

Manufacturing PMI printed 55.9 (above 55.5 expectations and the highest in 40 months)

Services PMI rebounded notably to 55.9 (well above 53.7 expectations and at its highest in 6 months)

February saw the eurozone’s growth spurt lose momentum, just as US composite growth soars to its highest since Nov 2015...

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

Business activity growth accelerated markedly in February, suggesting the economy is growing at its fastest pace for over two years.

“Even faster growth is signalled for coming months. February saw the largest influx of new orders for almost three years, while business expectations about the year ahead jumped to the highest since May 2015.

Such optimism encouraged firms to step up their hiring, with payroll growth reaching a two-and-a-half year high, underscoring the broad-based bullish mood across the business sector.

“On the downside, price pressures have intensified further. Costs are rising at the steepest rate for fourand-a-half years in the service sector with a five-year high seen in manufacturing. Inflation therefore looks set to accelerate alongside the upturn in the economy, as higher costs are passed on to consumers.”

The upbeat February PMI surveys are indicative of GDP rising at an annualised rate of 3.0%.