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US services activity slightly better than expected

By Oliver Haill

Date: Wednesday 03 May 2017

US services activity slightly better than expected

(ShareCast News) - US services sector output continued to grow modestly in April, though costs rose as input price inflation accelerated to its highest level in almost two years.
The Markit US purchasing managers' index showed a rise to 53.1 for April from 52.8 the month before, and slightly better than the flash estimate of 52.5.

Since March last year the services PMI has exceeded the 50 mark, which signals no change in growth, but April's rate of expansion was well down on the survey average and the second-slowest in the past seven months.

Where an increase in new orders was recorded, Markit found this was linked to successful advertising campaigns and strengthened market activity.

Chris Williamson, chief business economist at IHS Markit, noted the reading was only marginally higher than March's six-month low.

"Combined with a weak manufacturing PMI reading, the surveys suggest that business activity is growing at a slower pace than seen over the first quarter as a whole," he said.

"However, a robust rise is likely to be seen in second quarter GDP as the official numbers exhibit greater seasonality than the PMI, with consistently weak first quarters being typically followed by a rebound in subsequent periods. For this very reason, GDP data seemed to signal weaker growth than implied by the PMI in the first quarter of 2017."

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