The "soft", i.e., survey data, rollover accelerated this morning, when Markit reported that in March the Service PMI posted a second consecutive decline, dropping from 53.8 to 52.8, missing expectations of a 53.1 print. This was the lowest reading since September 2016.
New Business falls to 51.7 vs 53.6 in Feb, and was the lowest reading since March 2016. Additionally, the Outstanding Business index also fell vs last month. Latest data showed input costs rising at a solid rate, although a desire to strengthen profitability meant higher costs were passed onto clients wherever possible, according to Markit.
According to Markit's Chris Williamson “the March PMI numbers add to the picture of a relatively modest opening quarter to 2017 for the US economy. The surveys of manufacturing and services are running at levels consistent with GDP expanding by 1.7% in the first quarter.
“Growth of business activity appears to have peaked in January, sliding to a six-month low in March. The loss of momentum is linked to weaker inflows of new work, with the surveys providing some evidence that demand is being dented in part by higher prices."
"However, business confidence, although up on February, has failed to regain the levels seen at the start of the year, suggesting a less ebullient mood has developed among companies than seen in the immediate aftermath of the presidential election"
This lower degree of business optimism has translated into weaker hiring, with the March surveys indicating the smallest net gain in private sector employment since last October, continuing the trend of baffle with BS, and refuting this morning's stellar ADP report.