US economy ends year on modest note, IHS Markit gauges show

[NEW YORK] Two surveys of US manufacturers and service companies suggested US economic growth is holding up at a modest pace at year's end, with the potential to pick up in 2020.

The IHS Markit purchasing managers' index (PMI) for factories was little changed in December at 52.5 after 52.6 the prior month, while a similar gauge for service industries rose to a five-month high of 52.2, according to preliminary figures released Monday. Readings above 50 indicate expansion.

While the survey is consistent with economic growth of about 1.5 per cent, the details indicate positive momentum for a pickup in 2020, which should keep Federal Reserve policy makers on hold, IHS Markit economist Chris Williamson said in a statement. The reports also show the US outperforming its large-economy peers, as the euro area's composite PMI registered 50.6 and Japan's was 49.8.

A separate report Monday from the Federal Reserve Bank of New York showed that manufacturers in the state are growing more upbeat, with the orders outlook gauge rising to the strongest since February.

The IHS Markit data on manufacturing have contrasted in recent months with PMI surveys released by the Institute for Supply Management, which have some different methodology. The ISM's factory PMI unexpectedly fell in November to 48.1, signalling contraction for a fourth month.

The ISM factory index for December will be released Jan 3, with the services gauge out Jan 7. Final December data for the IHS Markit numbers will be out Jan 2 for manufacturing and Jan 6 for services.

BLOOMBERG