U.S. services PMI unexpectedly rises in October - Markit
Investing.com
Published Oct 26, 2016 09:46AM ET
U.S. Markit services PMI registers a surprise increase in October
Investing.com – Activity in the U.S. services sector unexpectedly rose in October, boosting optimism over the state of the U.S. economy, according to preliminary data released on Wednesday.
In a report, market research group Markit said that its flash services purchasing managers’ index (PMI) rose to 54.8 in October, from the prior month’s reading of 52.3.
Analysts had expected the reading to remain unchanged.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
Markit noted that the increase in business activity in October accelerated at a robust pace, with new order volumes rising at the quickest rate this year.
Furthermore, the research group remarked that service providers reported the strongest level of business optimism since August 2015.
When combined with manufacturing activity, “the latest reading pointed to the sharpest expansion of private sector output since November 2015”, the report indicated.
“Taken together, the ‘flash’ PMIs suggest that the economy is growing at an annualized rate of around 2% at the start of the fourth quarter,” IHS Markit senior economist Tim Moore said.
On the downside, Moore noted that job creation remained relatively subdued in October, with firms reporting cautious hiring plans and efforts to alleviate pressures on margins.
In an immediate reaction, EUR/USD traded at 1.0933 from 1.0944 prior to the release, GBP/USD was at 1.2225 from 1.2231 earlier, while USD/JPY was at 104.15 compared to 104.09 previously.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 98.41, compared to 98.35 ahead of the report.
Meanwhile, U.S. stocks were trading lower after the open. The Dow 30 fell 110 points or 0.59%, the S&P 500 dropped 13 points or 0.60%, while the tech-heavy Nasdaq Composite traded down 42 points or 0.86%.
Elsewhere, in the commodities market, gold futures traded at $1,273.20 a troy ounce, compared to $1,273.95 ahead of the data, while crude oil changed hands at $49.03 compared to $49.11 previously.
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