Services Pull Down PMI Composite Index

An 11-month high for manufacturing couldn't offset a 15-month low for services which pulled down the PMI composite to 53.0 in the December flash and a 9-month low. Manufacturing, at 55.0, is the more closely watched sector for economic change and the results here are very positive with sharp increases posted for new orders, production and especially employment where growth in this sample is the best since September 2014. The gain in employment reflects efforts underway among manufacturers to expand capacity and meet what is strong domestic demand and fulfill the needs of new product launches.

Turning to services, however, the results become subdued at a reading of 52.4 and including loss of momentum for new orders which eased to their lowest level in 8 months. Hiring in this sample is at a 7-month low. Business optimism, which is very strong on the manufacturing side, is much softer in services, at the second lowest readings since June last year.

Outside of input costs for manufacturing, price data in today's report are soft. Today's mixed results are of interest, confirming what appears to be a very strong year-end finish for manufacturing and what may be, despite contrary hints in this morning's retail sales results, a soft finish for services, a sector that may not signal economic pivots with certainty but what is a far larger sector than manufacturing.