Preliminary data released by IHS Markit on Friday revealed that U.S. private sector business activity expanded strongly during January 2021.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) came in at 59.1 in January, up from 57.1 in December. This was the highest reading on record. Economists had expected the reading to drop to 56.5. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. Alongside stronger expansions in production and new exports orders, which where the highest since 2014, the headline figure was driven up by another substantial deterioration in vendor performance, the report said. In addition, the rate of job creation was the sharpest for two years and strong overall.

The Markit flash services purchasing manager's index (PMI) rose to 57.5 in January from 54.8 in the previous month. The rate of expansion was the second-steepest since March 2015 and strong overall. Economists had expected the reading to decrease to 53.6. The rise in output was often linked to another monthly increase in customer demand.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 58.0 in January, up from 55.3 in December, pointing a regain in growth momentum at the start of 2021, as the pace of increase quickened to the second-fastest since March 2015.

Chris Williamson, Chief Business Economist at HIS Markit noted: “US businesses reported a strong start to 2021, buoyed by hopes that vaccine developments will mean the worst of the pandemic is behind us, and that the new administration will provide a stable and supportive environment for stronger economic growth.”