US PMI Manufacturing dropped slightly to 52.5 in December, down from 52.6, beat expectation of 52.4. PMI Services rose to 52.2, up from 51.6, beat expectation of 51.4. PMI Composite rose to 52.2, up from 52.0, hitting a 5-month high.
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said:
“The surveys bring welcome signs of the economy continuing to regain growth momentum as 2019 draws to a close, with the outlook also brightening to fuel hopes of a strong start to 2020. Business activity, order book and jobs growth all accelerated to five-month highs in December, buoyed by rising domestic sales and further signs of renewed life in export orders.
“December’s expansion was led by an improved performance of the vast services sector, accompanied by another month of steady manufacturing growth. Encouragingly, expectations for business activity in the year ahead lifted higher in both sectors to reach the highest since June to suggest the expansion will continue to gain momentum as we head into the New Year. Optimism reflected reduced fears over trade wars and more favorable financial conditions.
“The brighter news needs to be caveated, as the overall rate of economic expansion signalled by the surveys remains well below that seen this time last year, commensurate with GDP rising at an annualised rate of just over 1.5%. Importantly, however, the welcome signs of improvement help to ward off recession risks and should keep the Fed on hold in the coming months. The upward trajectory in the surveys support our expectations that the US economy is on course to see another year of above-potential GDP growth of approximately 2.2% in 2020.”
