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August Business Activity in the U.S. Slows Down

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The latest purchasing managers’ survey reveals that business activity in the U.S. experienced a weaker pace of growth in August. The survey, published on Wednesday, indicates that the private sector is teetering near stagnation.

The S&P Global Flash Composite Output Index, which measures activity in the manufacturing and services sectors, dropped to 50.4 in August from 52.0 in July. This is the lowest rate seen in the past six months.

While the reading suggests that the U.S. economic output is still expanding, it is doing so only marginally and barely above the 50 no-change mark.

Chief Business Economist at S&P Global Market Intelligence, Chris Williamson, expressed his concerns regarding the near-stalling of business activity in August. He believes that this raises doubts about the strength of U.S. economic growth in the third quarter.

The demand seems to be displaying increasing lethargy due to high prices and rising interest rates.

Williamson pointed out that while services had led the acceleration of growth in the second quarter, along with a drop in factory output, both effects have now faded.

The PMI also reports that manufacturing slipped further into contraction territory, registering a score of 47.0 in August compared to 49.0 in July. This figure falls short of economists’ consensus forecast.

Furthermore, the flash services PMI continued to slow down, recording a score of 51.0 in August, down from 52.3 in the previous month. This is the lowest level seen since February.

Williamson highlighted the rising wages and increased energy prices, which are contributing to higher input-cost inflation. This factor raises concerns that prices will remain higher for an extended period.

Overall, the data suggests that business activity in August has encountered obstacles and poses challenges to the U.S. economic growth trajectory in the third quarter.

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