Strong performance in the services sector drives US private sector growth: Macro snapshot

  • 1/6/2022
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The US private sector experienced a sharp upturn in December, mainly driven by a strong services sector, IHS Markit said. The country’s Composite Purchasing Managers’ Index hit 57 last month, comfortably above the 50-threshold but decelerating slightly from the previous month’s 57.2. New business went up significantly as client demand in the services sector strengthened. Growth in new orders was the highest in five months while new export orders increased for the second consecutive month amid larger demand for manufacturing and services orders. However, input price inflation reached a record high on input shortages, transportation delays and higher labor costs, the firm added. China’s services sector The Chinese service sector activity expanded at a faster pace in December amid rising demand and easing inflationary pressure, but the continuing outbreak of COVID-19 weighed on the outlook. The Caixin/Market Services Purchasing Managers" Index rose to 53.1 in December from 52.1 in November, remaining above the mark that separates growth from contraction on a monthly basis. The service sector has been slower to recover from the pandemic than the manufacturing sector, as it is more vulnerable to COVID-19 outbreaks and anti-virus measures, with leisure and tourism businesses hardest hit, according to analysts. German industrial orders Rising demand from abroad led to a significant recovery in German industrial orders in November. Moreover, orders for goods made in Germany rose 3.7 percent month-on-month on seasonally adjusted terms after a revised 5.8 percent decline in October, according to the Federal Statistical Office. US interest rate Earlier hikes in the US interest rate seem more likely than before as output and inflation gain momentum in the country, the Federal Reserve said. The Fed also added that a narrowing of the balance sheet is set to take place after raising rates, Bloomberg reported. In their December meeting, the Federal Open Market Committee decided it would taper the Fed’s bond buying program at a quicker rate than previously stated.

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