U.S. service sector activity expands fastest since November 2015
Staff Writer |
October data pointed to a marked improvement in growth momentum across the U.S. service sector. Business activity and incoming new work both expanded at the fastest pace for 11 months.
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The latest survey also revealed an upturn in confidence towards the year-ahead business outlook, with service providers reporting the strongest optimism since August 2015.
Input cost pressures meanwhile picked up from the 19-month low recorded in September, which contributed to a slightly faster rise in prices charged by service sector companies during October.
At 54.8, up from 52.3 in September, the seasonally adjusted Markit Flash U.S. Services PMIâ„¢ Business Activity Index signalled a robust expansion of service sector output in October.
The latest reading was the highest since November 2015 and contrasted with the subdued growth patterns seen through the third quarter of 2016 (index at 51.5 on average).
Service providers noted that supportive domestic economic conditions and an improvement in clients’ willingness to spend had underpinned the latest upturn in business activity.
Reflecting this, new order growth also accelerated for the first time in three months and was the fastest since November 2015.
Some survey respondents commented on greater business optimism and a corresponding rise in investment spending among clients. Higher levels of incoming new work resulted in a further rise in unfinished business at service sector companies during October.
Although only modest, the rate of backlog accumulation was the joint-fastest recorded since April 2015.
Despite stronger business activity growth, service providers indicated that cautious staff hiring patterns persisted in October. Measured overall, job creation picked up only slightly from the three-anda-half year low recorded in September.
While some firms sought to boost their payroll numbers in response to rising workloads, there were also reports that efforts to reduce costs had led to the non-replacement of voluntary leavers. ■