2023-08-24 09:08:39
A survey showed yesterday, Wednesday, that business activities in the United States came close to stagnation in August, with growth reaching the lowest level since last February, in light of the decline in demand for new business in the huge services sector.
And “Standard & Poor’s Global” – in its preliminary combined index of purchasing managers in the United States, which monitors the manufacturing and services sectors – said that the reading fell to 50.4 points in August from 52 in last July; This is the largest decline since November 2022.
And while the current August reading indicated growth for the seventh month in a row, it is very slightly higher than the 50-point level separating growth from contraction, in light of weak demand for manufactured goods and services as well.
For months, a strong labor market and strong consumer spending mitigated recession fears, and both factors led to an upward revision of the GDP growth forecast, but Wednesday’s data paints a less optimistic picture regarding the economy.
The growth of the services sector activity recorded the slowest pace since last February, as it recorded a reading of 51 points in August. The manufacturing purchasing managers’ index also fell further, recording 47 points, down from 49 points in July; to contract for the fourth month in a row.
Yesterday’s data came out worse than expected; As economists polled by Archyde.com predicted that the services index would score 52.2 points, and the manufacturing industries index would reach 49.3 points.
Chris Williamson, chief business economist at Standard & Poor’s Global Market Intelligence, said the arrival of business near a standstill in August “raises doubts regarding the strength of US economic growth in the third quarter.”
He added that the survey shows that the rapid pace of growth led by the services sector in the second quarter is now fading, in addition to a further decline in factory production.
Consumer demand was a major pressure on corporate revenue, with contraction in new business and orders for companies in all sectors.
New business fell in the service sector for the first time in 6 months, as the reading fell to 49.2 points from 51 points in the previous month.
British economic contraction
In Britain, the country’s economy witnessed its largest contraction in August since the beginning of 2021, when the country was in a state of closure due to the Corona pandemic (Covid-19), while the effect of higher interest rates began to appear, according to the composite PMI in the United Kingdom. .
This is the first slowdown in activity in the United Kingdom since last January, according to this leading indicator released yesterday, Wednesday, by S&P Global. The decline in activity was particularly noticeable in the industrial sector.
The report said that companies are witnessing a decline in orders, and “attribute this to the reluctance of their customers to enter into financial obligations in the face of high interest rates and the increasing tightening on household income.”
The Bank of England raised the main interest rate for the 14th time in early August to 5.25%, in an attempt to calm rising prices in the United Kingdom.
The contraction in the economic activity of the private sector in Britain coincided with a broader slowdown in the rest of Europe, as the purchasing managers’ index data in the eurozone issued yesterday, Wednesday, indicated an increase in the severity of the contraction in private sector activity, following the service sector ceased to play the role of a bright spot in the economic scene, and entered The cycle of decline along with the manufacturing sector.
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