Markit industry report reveals private sector to bounce back in November
An industry report released by financial data firm Markit on Monday indicated a return of the private sector industry after a slowdown in October. The report also showed new orders had grown at its fastest since April of last year.
Since October 2009, the industry report was also Markit's first month publishing of its composite and service sector data. Based on its historical data, October 2013 reading was the lowest of all.
It can be recalled that uncertainty about the US Federal Reserve's plans for its monthly bond purchases program reached a certain high last month, and rumors about a tapering of the economic stimulus, among others had produced soft economic data. Tension about the program was most likely subdued when Fed officials, most notably Fed vice chair Janet Yellen, spoke in public about their sentiments regarding the asset-buying program.
Markit also said preliminary composite Purchasing Managers Index (PMI) jumped from 49.6 last month to 57.1 this November. The new orders sub-index experienced a significant increase from 53.9 to 57.9. PMI for the services sector also increased from 49.3 in October to 57.1 in November. Sub-index for new business in the services sector increased to 58.5, which was the same last March 2012, from 54.2 last month.
Manufacturing sector PMI by Markit also showed an increase to 54.3, which was an eight-month high.
Reading above 50 would mean expansions in sector activity. This means possibilities for mergers and acquisitions. PMI is the weighted average of indexes from the manufacturing and services sectors.
Markit chief economist Chris Williamson said about the data in its industry report, "Businesses have clearly rebounded strongly from any government shutdown worries, but companies report that they are concerned that the ongoing uncertainty regarding the debt ceiling has tempered their outlook for next year."
Despite the optimistic data, hiring pace in both services and manufacturing sectors, and the private sector all in all slowed a little bit in the latest month.
The flash reading of Markit was based on responses from around 85% of US companies in the services sector. A final reading will be made public on the first business day in December, Reuters said in its report.