The Markit USA flash (preliminary) composite PMI shows strength this month as have other diffusion index reports including ISM and the Fed regional reports. Delivery delays contributed to manufacturing strength. Those delays are a hurricane impact as are reports of hiring.
The Markit Composite PMI came in at 55.7 ahead of the Econoday consensus estimate of 55.7. Econoday often makes a comment about these diffusion indexes not matching actual production, but not today.
Advance indications are picking up increasing signals of growth including the PMI composite which, at 55.7 in the October flash, easily tops Econoday’s high forecast. Manufacturing is contributing strongly to the rise, at 54.5 which is an 8-month high and up strongly from September. Services are also contributing, at 55.9 for also a sizable gain.
Strength in the manufacturing sample is centered in new orders and employment. Of special note are unusual delivery delays, which help lift the composite indexes and are the result of lingering disruptions and stretched workloads following Hurricanes Harvey and Irma. Orders and employment are moderating for the service sample but not the 6-month outlook which is improving. Price data show moderating but still strong pressures for inputs but slowing traction for selling prices.
Markit Economic’s samples have been reporting significantly less strength than other private and regional reports including the ISM where both the manufacturing and non-manufacturing composites are near or over the 60 mark. The uptick for Markit’s data offers confirmation perhaps of strength in other reports and does point to a solid close for the 2017 economy. Note that private and regional reports are based on small sample sizes and offer no more than a directional signal for economic change.
Unusual Delays
Unusual delays and unusual hiring are hurricane impacts. The uptick confirms nothing. These diffusion indexes have been wrong for over a year.
