So far there’s little evidence Irma and Harvey have dented the U.S. economy

The U.S. economy appears to have largely shrugged off the damaged caused by the hurricanes that ravaged Texas and Florida, according to one of the first looks at the growth in September.

Service-oriented companies that employ most Americans expanded a touch slower this month while manufacturers grew slightly faster, IHS Markit reported Friday.

“The U.S. economy showed encouraging resilience in a month of hurricane disruption,” said Chris Williamson, chief business economist at IHS Markit.

The “flash” manufacturing PMI edged up to 53 from 53.8 in August. The flash services PMI slipped to 55.1 from 56, but the reading in August was the highest in 21 months. Any number above 50 shows that businesses are growing.

The “flash” results offer a preliminary view of how key sectors of the economy performed this month. A final report will be issued a few weeks later.

While the real economy is holding up, however, the disruption caused by the hurricanes are likely to depress the official scorecard for the U.S. economy, known as gross domestic product, in the third quarter. But then the repair efforts will inflate fourth-quarter GDP.

Altogether it’s expected to be a wash.

The news was not all good in the Markit report. The hurricanes disrupted the flow of some key supplies in manufacturing, leading to shortages and higher prices. The cost of raw and partly finished materials rose to the highest level since 2012.

Executives surveyed by IHS were also more skittish about the future.

“A drop in business optimism about the year ahead suggests that companies have become less confident in the longer-term outlook,” Williamson said.

One potential salve could come in the form of stronger imports in the months ahead. The economies of Europe and other major countries have strengthened lately. The IHS eurozone flash index for manufacturing, for example, hit a six-and-a-half year peak in September.

Some economists say the global economy hasn’t been this strong in a decade.
Source: MarketWatch

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