Published: Wed, September 07, 2016
Economy | By Melissa Porter

US services firms register slowest growth since 2010

US services firms register slowest growth since 2010

But the ISM services index, and its index for the manufacturing sector released last week - which fell into contraction territory - indicate growth remained sluggish in August.

A gauge of US service-sector activity dropped in August, signaling slowing growth in key sectors of the USA economy.

Economists surveyed by The Wall Street Journal had expected an August reading of 55.0.

Goldman Sachs Group Inc. economists led by Jan Hatzius, who last week said the August payrolls gain was "just enough" for a large majority of Fed officials to support a September rate increase, on Tuesday said the ISM manufacturing and services gauges "may have some bearing" on the Fed's decision this month.

"The business environment has softened a bit over the last month".

Taking both of these reports together and weighting them for their share of the economy, the combined ISM report for the month of August dropped from 55.1 down to 51.2.

Numerous details of Tuesday's report were negative. Inventories at services industries contracted last month as did backlog orders and new export orders. The U.S. economy grew 1.0 percent in the first half of the year. Manufacturing and mining shed jobs over the month.

Economic activity in the US non-manufacturing sector grew in August for the 79th consecutive month, according to the nation's purchasing and supply executives in the Non-Manufacturing Institute for Supply Management's latest monthly "Report On Business".

US services companies grew last month at the slowest pace in more than six years, a private survey finds.

Naeem Aslam, chief market analyst at Think Markets, said: "When you see the ISM non-manufacturing number dropping like this, it shakes the floor on which traders are building the hopes that the Fed could increase the interest rate".

The ISM manufacturing index released on September 1 showed activity contracted in August for the first time in six months, with producers cutting orders and production and pulling back on hiring.

"Taken together, the manufacturing and services PMIs are pointing to an annualized GDP growth rate of a mere 1%, similar to the subdued pace signaled by the surveys throughout the year to date, suggesting that those looking for a strengthening in the rate of economic growth will be disappointed once again", said Chris Williamson, Markit's chief economist, in the release.

Like this: