Inflation is here and the most important part of the US economy just proved it

The US services sector marches on.

Both the Markit services purchasing managers index and ISM non-manufacturing index came in solidly in growth territory, albeit with mixed results against expectations.

The ISM’s non-manufacturing also came in at 54.8, below expectations of 56.0 from economists, and well below last month’s 57.1 reading.

The Markit services purchasing managers index (PMI) came in at 54.8 on Thursday, right on the expected reading of 54.8. This is a slight increase from last month’s reading of 52.3.

Anything above 50 is expansionary for the sector.

According to Markit, this was the strongest rise for business activity and new work in the index since November 2015.

Perhaps most importantly, both indexes showed that the one thing lacking from the economy may be finally coming back: inflation.

Inflation has been running well below the Federal Reserve’s target for some time and even sparked deflationary fears. But based on the Markit and ISM indexes, it appears services firms are starting to see a pick up in price growth.

“The latest figures also highlighted that inflationary pressures picked up since September, with average cost burdens rising at the strongest pace for 15 months,” said the release from Markit.

The ISM reading showed similar signs, with the highest reading for the price index since August 2014 according to Bloomberg’s Matthew Boesler and according to ISM it was the 13th straight month the price index increased.

This follows along with the increasing consumer price index and personal consumption expenditures measures of inflation which have been moving northward for a few months. Commentary from the Fed on Wednesday also indicated the central bank is seeing these inflationary pressures in the economy.

There it is, inflation is back on the menu.

NOW WATCH: The ‘Apple of China’ just unveiled a phone that’s more powerful and better looking than the iPhone

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.