Markit's US services PMI better than expected

Markit’s final US business services purchasing managers' index rose to 51.3 in March from 49.7 in March and the 'flash' estimate of 51.0, back above the 50.0 mark that separates contraction from expansion.

The reading was also better than the 51.0 economists had pencilled in.

Nevertheless, it was still the second-lowest reading since October 2013 and pointed to only marginal upturn in service sector output.

Adjusted for seasonal influences, the final Markit US Composite PMI Output Index came in at 51.3, up from a flash reading of 51.0 and 50.0 in February and signalling a return to growth for overall US private sector activity.

Markit’s chief economist Chris Williamson said: “The welcome news of sustained robust hiring in March, as indicated by both the PMI surveys and non-farm payroll numbers, masks a more worrying picture of a further slowing in economic growth so far this year.

“Demand is growing at the slowest rate since late- 2009 and, with business optimism also sliding to its weakest since the recession, firms clearly expect worse to come. Firms are worried about a potential weakening of demand both at home and abroad in the face of various headwinds. As such, the data support the cautious approach to policy tightening currently advocated by Fed Chair Janet Yellen.”