Business activity in US service sector expands at weakest pace in five months

The Markit Flash US Services PMI for the month of July has signalled that the US service sector continued to be muted. The July data has suggested that activity in the services sector has grown at the weakest rate in the present five-month sequence of growth. A subdued rise was also seen in new business. Meanwhile, on a bright spot, the pace of job creation improved a bit, whereas business sentiment rebounded noticeably from the record low in June.

The s seasonally adjusted Markit Flash U.S. Services PMI Business Activity Index dropped to 50.9 in July from June’s 51.4. The latest growth was the weakest in five months. Even if certain panellists have mentioned that activity had been raised in response to new orders, others have stated that weak economic conditions have dampened activity, noted Markit.

Anecdotal evidence about new business was similar to that seen for activity. Certain respondents recorded a rise in client demand; however, others implied that a subdued economic scenario had made it quite challenging to secure new work. Meanwhile, new business grew at a modest pace in the month, after the growth rate eased since June.

US service providers increased their staffing levels in order to handle higher backlogs and because of new order growth. Furthermore, the job creation’s pace was strong and rose to a three-month high. Meanwhile, muted cost inflation was recorded again the recent survey period.

Business sentiment on the other hand recovered to the highest since the beginning of 2016 following reaching a record low in June. Respondents noted plans of business growth and hopes for rebounding economic conditions, stated Markit. According to certain panellists, activity is likely to recover after the presidential election later in 2016.