|Level||53.6||53.0 to 56.4||53.3||56.2|
December business slowed noticeably in Markit's US service sector sample, to a composite 53.3 from 56.2 in November. The mid-month flash for December was 53.6.
Growth in new business slowed for a third straight month and is at its softest rate since September 2012. Output also slowed as did employment where growth, at an 8-month low, is no better than marginal. Price data are subdued reflecting falling fuel costs for inputs and lack of pricing power for prices charged.
Despite the slowing, growth was still comfortably above 50 in December and readings on expectations remain strong. The next reading on the service sector is coming up at 10:00 a.m. ET with the ISM report which also tracks the construction and mining sectors.
Market Consensus Before Announcement
The Markit PMI services flash index reported abrupt slowing in growth in early December, to 53.6 versus 56.2 in the final November reading and 56.3 in the mid-month November reading. December's flash was the lowest reading since the heavy weather of February. Growth in this sample peaked in June and has been slowing the past 6 months, underscored by further moderation this month in new business.
US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.
Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.
The Markit PMI Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.
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