US consumer services sector grows strongly in June on expansion of new business and employment

Markit’s recent US Sector PMI data indicates a widespread recovery in growth at the end of second quarter of 2016. All the seven monitored sectors, excluding industrials, witnessed a rapid growth or a deceleration in the pace of contraction in activity. Therefore the US economic growth picked up; however, it continues to be amongst the weakest recorded since the height of the financial crisis in 2009, noted Markit.

In June, the US sector rankings were led by consumer services. Output in the sector grew strongly after nearly stagnating in May, mainly due to solid growth in new business and employment. Consumer services sector’s robust performance in the latest period signified that it was the best-performing sector in the second quarter on average. This was a great rebound from the beginning of the year, when the output had declined for the first time in almost two years.

Households continued to be at the front of the US economic growth midway in 2016, given that consumer goods were in growth territory. Even of consumer goods’ production grew just slightly, firms seemed optimistic regarding the near-term outlook.

Financials indicated a similar trend to consumer goods, with expansion of output still quite muted but new orders and employment rising sharply. Markedly, new business growth bolstered to a 15-month high. Basic materials sector was the only one to have registered a decline in production in June. However, the pace of drop eased, but marginally.

Meanwhile, industrials, healthcare and technology all recorded growth of output. The pace of expansion was just modest; however, following contractions in early 2016, they show that the sectors continued to be on an upward path in June.