24 Feb 2015
US service sector activity growth rebounds in February
FXStreet (London) - At 57.0, up from 54.2 in January, the seasonally adjusted Markit Flash US Services PMI Business Activity Index highlighted the fastest rate of output growth since last October. February data pointed to a robust and accelerated increase in US service sector business activity. Moreover, the latest reading was broadly in line with the average seen during 2014 as a whole (57.1). Higher levels of service sector business activity were driven by a strong rebound in new work in February.
According to the Markit survey, growth of new business picked up from January’s survey-record low and was the sharpest for four months. Reports from survey respondents suggested that improving underlying economic conditions had boosted client demand in February. While some firms noted disruptions as a result of adverse weather conditions in the Northeast, there were also reports from companies based on the West Coast that unusually mild weather had supported new business gains during the latest survey period.
Meanwhile, Markit reported that payroll numbers picked up further at service providers in February. Sustained job creation has now been recorded by the survey throughout the past five years. The latest increase in employment was the fastest since November 2014. Moreover, service sector companies remain upbeat about their prospects for activity growth over the year-ahead, although the degree of optimism eased to a four-month low in February.
Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said: “Stronger growth of service sector activity in February puts a June Fed rate rise firmly back on the table. “While parts of the East coast have struggled in the face of adverse weather, other regions basked in unusually warm temperatures, boosting business above seasonal norms. Activity levels surged higher and inflows of new business boomed as a result.
“Alongside the upturn signalled by the sister ‘flash’ manufacturing PMI survey, the improved performance of the service sector in February means the economy looks to be enjoying yet another spell of robust growth in the first quarter. The two PMI surveys are so far running at a level consistent with at least 3.0 percent annualised GDP growth. While the overall rate of business expansion has cooled from the surging pace seen in the middle of last year, growth remains buoyant and, importantly, strong enough to drive yet another month of impressive job creation.
“The Fed will no doubt be encouraged by the resilience of the economy in the face of global headwinds such as the Greek and Russian crises, and increasingly minded to start the process of normalising monetary policy in June on the basis of these impressive survey results.”
According to the Markit survey, growth of new business picked up from January’s survey-record low and was the sharpest for four months. Reports from survey respondents suggested that improving underlying economic conditions had boosted client demand in February. While some firms noted disruptions as a result of adverse weather conditions in the Northeast, there were also reports from companies based on the West Coast that unusually mild weather had supported new business gains during the latest survey period.
Meanwhile, Markit reported that payroll numbers picked up further at service providers in February. Sustained job creation has now been recorded by the survey throughout the past five years. The latest increase in employment was the fastest since November 2014. Moreover, service sector companies remain upbeat about their prospects for activity growth over the year-ahead, although the degree of optimism eased to a four-month low in February.
Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said: “Stronger growth of service sector activity in February puts a June Fed rate rise firmly back on the table. “While parts of the East coast have struggled in the face of adverse weather, other regions basked in unusually warm temperatures, boosting business above seasonal norms. Activity levels surged higher and inflows of new business boomed as a result.
“Alongside the upturn signalled by the sister ‘flash’ manufacturing PMI survey, the improved performance of the service sector in February means the economy looks to be enjoying yet another spell of robust growth in the first quarter. The two PMI surveys are so far running at a level consistent with at least 3.0 percent annualised GDP growth. While the overall rate of business expansion has cooled from the surging pace seen in the middle of last year, growth remains buoyant and, importantly, strong enough to drive yet another month of impressive job creation.
“The Fed will no doubt be encouraged by the resilience of the economy in the face of global headwinds such as the Greek and Russian crises, and increasingly minded to start the process of normalising monetary policy in June on the basis of these impressive survey results.”