Private sector output growth in U.S. loses momentum in August
Staff Writer |
August data indicated that business activity growth in the U.S. private sector eased further from the three-year peak seen in May.
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A loss of momentum was recorded in both the manufacturing and service sectors during the latest survey period.
Payroll numbers meanwhile increased at the slowest pace since June 2017.
On a more positive note, inflationary pressures moderated in August, reflecting the least marked rise in average cost burdens since the start of 2018.
At 55.0 in August, down from 55.7 in the previous month, the seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index signalled the weakest rise in private sector business activity since April.
That said, the latest reading was still well above the 50.0 no-change value and broadly in line with its post-crisis average (55.2).
Slower business activity growth reflected the weakest rise in new order volumes since December 2017.
Some private sector firms cited difficulties sustaining the steep rate of order book growth achieved in the first half of 2018, despite robust client demand and favourable economic conditions.
Staffing levels increased at the softest pace for over one year in August.
Survey respondents noted that more cautious hiring strategies largely reflected the need to reduce operating expenses at their business units.
Latest data revealed another sharp rise in input costs at private sector companies, although the rate of inflation moderated to a sevenmonth low.
Reports from panel members continued to cite higher prices for steel-intensive items, alongside renewed pressure to boost staff wages.
The composite index is based on original survey data from the IHS Markit U.S. Services PMI and the IHS Markit U.S. Manufacturing PMI.
Service sector firms experienced another robust rise in business activity during August, but the rate of expansion eased to a four-month low.
This was signalled by a decline in the seasonally adjusted IHS Markit Flash U.S.
Services PMI Business Activity Index to 55.2 in August, from 56.0 in July.
New business volumes increased at the slowest pace seen so far in 2018, but the rate of expansion was in line with the average since the survey began in 2009.
Weaker growth in client spending contributed to a sustained fall in backlogs of work, with the latest decline the greatest since March 2017.
Moreover, service providers signalled the least marked rise in payroll numbers for eight months.
Input cost inflation moderated in August and was below the average seen during the first half of 2018.
However, prices charged by service sector firms continued to rise at one of the fastest rates seen over the past four years, reflecting efforts to alleviate pressures on operating margins.
IHS Markit U.S.
Manufacturing PMIâ„¢ The headline seasonally adjusted IHS Markit Flash U.S.
Manufacturing Purchasing Managers’ Index™ (PMI™ ) 1 registered 54.5 in August, down from 55.3 in July and the lowest reading since November 2017.
Mirroring the trends seen across the service sector, latest data pointed to slower rates of output and new business growth at manufacturing companies.
Job creation and capacity pressures also moderated in August.
Meanwhile, manufacturers continued to indicate a sharp lengthening of suppliers’ delivery times, which survey respondents linked to widespread truck driver shortages.
Stretched supply chains, import tariffs on metals, and a corresponding rise in demand for domestically sourced items contributed to greater input costs during August.
Nonetheless, the overall rate of input price inflation eased further from the seven-year peak seen in April.
Latest data also pointed to the least marked rise in factory gate charges for five months. ■