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Business growth eases slightly in November according to Markit's Flash Composite PMI reading of 54.6. The composite PMI is a blend of manufacturing and services. Flash means it''s a preliminary estimate.

The latest reading is signals the lowest output since July.

Key Findings

  1. Flash U.S. Composite Output Index at 54.6 (55.2 in October). 4-month low.
  2. Flash U.S. Services Business Activity Index at 54.7 (55.3 in October). 4-month low.
  3. Flash U.S. Manufacturing PMI at 53.8 (54.6 in October). 2-month low.
  4. Flash U.S. Manufacturing Output Index at 54.3 (54.6 in October). 2-month low.

Hurricane Impact

Once again, hurricanes make some of the data questionable from a medium to long-term perspective.

Markit reports cost pressures intensified at private sector companies with the second-fastest rise in manufacturing input price inflation since December 2012.

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A number of firms cited higher prices for chemicals and energy following supply chain disruption linked to hurricanes Harvey and Irma.

Strong input cost pressures resulted in the sharpest rise in prices charged by manufacturers for just over three years.

Transitory Inflation

The Fed will be pleased with rising prices but I suggest any hurricane impact is transitory.

Chris Williamson, Markit Chief Economist Comments

  • “US businesses reported another month of solid growth in November, putting the economy on course for a reasonable, though by no means stellar, fourth quarter. Current PMI readings are broadly consistent with GDP growing at an annualised rate of just over 2%.”
  • “There was also good news on hiring, with a slight uptick in employment growth meaning the surveys are indicating non-farm payroll growth of just over 200,000 in November.”
  • “Both input costs and selling price inflation picked up, suggesting the upturn is feeding though to higher price pressures, though some of the manufacturing price hikes were attributable to the short-term effects of the hurricane-related supply chain disruptions.”
  • “An upturn in new order inflows means we can expect a strong end to the year, though prospects for 2018 remain more mixed. Although expectations about the year ahead slipped lower in the service sector, future optimism hit a two-year high in manufacturing, suggesting the goods-producing sector may start to make a stronger contribution to the economy in coming months.”

Optimism is related to a pickup in orders following the hurricanes. It's a meaningless, if not contrary, indicator.

Mike "Mish" Shedlock