Markit US Sector PMI: Consumer Goods Sector Drives US Growth at Start of 2016

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Key points:

• Consumer goods tops new US sector PMI league table, followed by financials
• Consumer-led growth in 2015
• Weak trend in basic materials output amid record drop in input costs

The first public release of US Sector PMI data from Markit signalled higher output in all of the monitored sectors apart from consumer services during January. Consumer goods was the best-performing of the sectors monitored. It also registered the fastest growth in new orders and was the only sector to see backlogs increase at the start of 2016.

In contrast to its manufacturing counterpart, consumer services was bottom-ranked in January, reflecting the first reduction in output for nearly two years. This contrasted with the trend seen during 2015, when activity rose at the same marked pace as consumer goods output on average. Moreover, new business in consumer services fell for a second month running, signalling a further weak trend in activity as the first quarter progresses.

Output meanwhile rose solidly in financials and industrials at the start of 2016, and firms based in the technology, healthcare and basic materials sectors all also saw modest expansions in output.

Consumer-led growth in 2015

The January results follow a year in which the sector data signalled broad-based growth of the US economy, with all of the surveyed sectors recording solid expansions on average in 2015. However, while consumer goods and services led the

growth rankings across the year as a whole the data point to weakness in tourism & recreation in recent months, with the strength of the dollar and the threat of terrorism being possible contributory factors.