Markit Economics Indexes Show Solid Growth

Economic growth in November was solid but did slow slightly from October, based on Markit's suite of U.S. diffusion indexes where the composite fell nearly 1 point to a lower-than-expected 54.6. The two components slowed by roughly the same degree with the manufacturing PMI at 53.8 and services at 54.7.

New orders are rising at a solid rate while backlogs are up for a fourth month running. Business optimism is the strongest it's been in the sample since early last year. Inventories of finished goods fell reflecting sustained pressures on capacity, while efforts to build inventories of raw materials continue to be constrained by lengthening delivery times. Input prices are very hot this month, at the highest in 5 years and are being passed through to finished goods prices which are at a 3-year high.

New orders are the highlight of the report's service sample as is employment which is at a 3-month high. Business optimism is also very strong in services though slightly lower than October. Both input costs and selling prices are also increasing for this sample.

This report is stronger than the headlines and, led by wide growth in orders and optimism and building signs of supply chain constraints that include price pressures, points to a solid year-end for the economy.

Recent History Of This Indicator:
Markit's set of U.S. indicators showed strength in October to easily top Econoday's forecasts. Manufacturing jumped to an 8-year high while services held steady and strong. The consensus for November is calling for another solid showing, at 55.4 for the composite, 54.5 for manufacturing, and 55.4 for services.