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Getty Images Workers at a steel mill in Portage, Indiana.
The numbers: The IHS Markit flash purchasing managers index for manufacturing in fell to a 3-month low in January, while the services PMI strengthened to highest level since last March.
The flash manufacturing PMI fell to 51.7 in January from 52.4 in prior month, while the services PMI rose to 53.2 from 52.8 in December.
Any reading above 50 indicates improving conditions. The “flash” reading is based on approximately 85% of the final number of replies received each month.
What happened: Manufacturing firms noted a slower improvement in operating conditions. Both domestic and foreign client demand softened. In the service sector, sales strengthened for the third month in a row.
In separate reports, the UK economy returned to growth as the IHS Markit composite PMI climbed to 52.4, up from 49.3 in December. The Euro Area manufacturing PMI added 1.5 points to 47.8, its highest reading since April.
The big picture: The drop in the manufacturing PMI runs counter to some nascent optimism about the sector that has been bubbling up recently, especially after both the Empire State and Philly Fed surveys surprised to the upside in January.
What Markit said: “Manufacturing is not out of the woods yet, with goods producers seeing only modest gains in output and new orders,” said Sian Jones, an economist at IHS Markit.
Market reaction: The S&P 500 index SPX, +0.00% rose 1.6 points in early action on Friday.
