US Markit PMI manufacturing rose to 54.9 in January, up from 53.8 and beat expectation of 53.5. PMI services dropped to 54.2, down from 54.4 and beat expectation of 54.1. PMI Composite recovered to 54.5, up from 54.4.
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“US businesses reported a solid start to 2019, with the rate of expansion running only slightly weaker than the average seen in the second half of last year.
“The resilience of the survey data suggest little impact from the government shutdown on the private sector, with very few companies reporting any material detrimental impact on their output or order books.
“Historical comparisons suggest January’s survey data are indicative of the economy growing at an annualized rate close to 2.5%. However, as the survey does not include the government sector, the impact of the shutdown may not be fully captured.
“Manufacturers reported faster rates of increase for both output and order books during the month, accompanied by ongoing robust service sector growth. Both sectors continued to rely on domestic demand, however, with service sector exports falling for a second successive month and goods exports rising only moderately, acting as a drag on overall order books.
“The jobs data from the surveys were also somewhat disappointing, with the overall rate of job creation slipping to a 20-month low. However, even this weaker January survey employment index reading is consistent with private sector payroll growth of approximately 150,000.
“Encouragingly, business sentiment about the year ahead lifted higher, suggesting companies have started the year with increased optimism, boding well for robust business growth to be sustained in coming months.”