For the second time in a week the two major business sentiment surveys in the United States are pointing in opposite directions, leaving observers to wonder where the economy may be headed in the fourth quarter.
Markit Economics, a London based firm, reported that its services purchasing managers index dropped to 56.2 in November, down from 56.3 a month earlier and below the median 56.5 median estimate. It was the fifth straight monthly decline since the index reached an almost three year high of 61.0 in June. The Markit data goes back to December 2011.
Fifteen minutes after the Markit release the Institute for Supply Management, an American company out of Tempe Arizona, issued its November findings.
Its service sector index soared to 59.3, well beyond the October reading at 57.1 and also the median forecast of 57.5. It was the second highest score in more than nine years and seemed to indicate that services have recovered from a two month swoon after touching that almost decade high in August.
The disparity mirrors the same firm’s reports on manufacturing industries released on Monday.
Markit's index rose 0.1 to 54.8 but this still represented the third drop in a row since scoring 57.9 in August and was the lowest measure since January.
On the other hand the ISM manufacturing index came in at 58.7, better than the 58.0 prediction, though slightly lower than October's 59.0. It was the third best level in over six years, topped only by 59.3 in February 2011 and 59.0 twice in August and October of this year.
The difference in the surveys is further reflected in the comments from the spokesmen.
ISM's Anthony Neives wrote that "services [are] in strong uplift in recent months".
Markit’s Chris Williamson noted that "moderating growth in the service sector is a sign of domestic demand weakening...services collectively grew at a much reduced rate". “The final PMI data confirm earlier flash readings that the US economy is likely to have slowed further in the fourth quarter. GDP looks set to rise at an annualized rate of 2.5%, down from 3.9% in the third quarter.
Both surveys measure sentiment, what purchasing managers report is the tenor of their businesses in various categories rather than actual economic data.
Friday's non-farm payrolls will provide a statistical check as the economy is predicted to have added 230,000 new positons, which, if accurate, would be the tenth month in a row of more than 200,000 new jobs.
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