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US payroll growth expanding at the weakest rate in nearly one-and-a-half years

November 26 2018

Private sector firms indicated greater caution in terms of staff hiring, with payroll numbers expanding at the weakest rate in almost one-and-a-half years, according to the IHS Markit Flash US Composite Purchasing Managers’ Index Output Index.

November’s data pointed to another robust increase in US private sector output, supported by resilient rates of expansion at both manufacturing and service sector companies. However, the latest survey also revealed a loss of momentum for new business growth, with order books improving at the slowest pace since December 2017.

“Solid flash PMI numbers for November add to evidence that the US is enjoying sustained robust economic growth in the fourth quarter,” said Chris Williamson, chief business economist at IHS Markit.

The surveys are broadly consistent with the economy growing at an annualized rate of 2.5%, building further on the country’s best growth spell since 2014 seen in the second and third quarters, according to Williamson. But the November survey does raise some warning flags to suggest growth could slow in the coming months.

“In particular, growth of hiring has waned as companies grew somewhat less optimistic about the outlook,” Williamson said. “Goods exports also appear to be coming under increasing pressure, often linked to trade wars having dampened demand. However, it should also be remembered that some pullback in growth was to be expected after October’s numbers were boosted by a post-hurricane rebound, especially given the historically high levels of production, order books and employment.”

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