Saturday, 18 November, 2017

United States service sector activity rises further in October

Manufacturing PMI advances in Oct UK construction activity subdued in October and confidence for next year falls
Juana Turner | 05 November, 2017, 02:09

Aashna Dodhia, an economist at IHS Markit, said recovery from the GST implementation "was sustained in the private sector in October, mainly radiating from service providers as growth in manufacturing was relatively subdued".

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose unexpectedly to 55.6 in October from 53.6 in September.

On the basis of past form, the services index points to an acceleration in official services growth from Q3's 0.4% rate to about 0.7% or so, said Ruth Gregory at Capital Economics, with the survey's forward-looking balances suggesting the services sector should be able to sustain the growth momentum. "Output rose only fractionally and new orders stagnated over the month".

This was largely due to improved order growth following a 13-month low in September, as well as resilient client demand and new work increasing at the fastest rate since May.

Service providers were cautious about future workloads, with business optimism well below its long-run trend and still softer than seen on average in the first half of 2017, the survey showed.

"The main source of longer-term anxiety continues to be the path to Brexit", CIPS director of customer relationships, Duncan Brock, said.

Input prices continued to increase notably in October and were linked to a variety of expenses.

The research showed order books and "resilient" demand from clients boosted the sector, alongside a "positive development in terms of operating expenses" as cost inflation eased to its lowest since September past year.

Meanwhile, prices charged inflation continued to rise, reaching a six-month high.

Economists said this was consistent with fourth-quarter United Kingdom gross domestic product growth improving from the 0.4% rate in the third quarter, though the PMIs do not always match up with official figures and do not include the struggling retail sector.

Chris Williamson, chief business economist at IHS Markit, said the survey provides "some justification" for Thursday's hike but cautioned that the outlook remains fragile. The economy is expected to expand 6.7 percent this fiscal year, its weakest pace in four years, a recent Reuters poll showed.

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