U.S. service sector records fastest upturn in new work for 12 months
Staff Writer |
U.S. service sector companies reported another robust increase in business activity during November, with the pace of expansion holding close to the 11-month peak seen in October.
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As a result, growth momentum remained much stronger than seen in the first half of 2016.
Service sector activity was supported by the fastest rise in incoming new orders for 12 months, alongside greater efforts to reduce work-in-hand. The fall in backlogs of work was the first since June, and partly reflected a sustained upturn in staff hiring.
Meanwhile, input cost inflation eased slightly in November and prices charged by service providers rose at the slowest pace for seven months. Adjusted for seasonal influences, the Markit Flash U.S. Services PMIâ„¢ Business Activity Index1 registered 54.7 in November.
This was down only fractionally from 54.8 in October and the secondstrongest seen over the past 12 months. As a result, the average reading so far in Q4 points to the fastest upturn in business activity since the final quarter of 2015.
Service providers commented on stronger demand from both businesses and consumers in November, helped by the improving economic backdrop. Some firms also noted that the completion of the election cycle had a favourable impact on client spending.
Latest data indicated that overall new business growth accelerated for the second month running and was the fastest since November 2015.
Despite a sharper upturn in new orders, service sector companies indicated a reduction in backlogs of work during November.
The fall in unfinished business was the first since June, which some firms linked to increased investment spending and greater payroll numbers. Nonetheless, the rate of staff hiring was only modest in November and remained weaker than the average seen since the jobs rebound began in early-2010.
Looking ahead, service providers indicated an upbeat assessment of their growth prospects for the next 12 months. The degree of optimism eased slightly since October, but remained well above the post-crisis low seen in June.
Survey respondents generally cited an expected improvement in U.S. economic conditions and an associated upturn in client spending. ■