Private sector companies across the U.S. indicated a further strong increase in business activity during August, but the pace of growth slowed to an eight-month low.
Source: IHS Markit
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Capacity pressures, material shortages, and spread of the Delta variant largely impacted on the output expansion in the U.S. economy.
The IHS U.S. Composite PMI Output index was 55.4 in August, down sharply from 59.9 in July. Output growth rate slowed for the third consecutive month from May’s series high.
Shortages of raw materials and labor are holding back output as well as increasing inflation. New order growth was the weakest this year, while employment grew at the lowest rate in over a year.
Chris Williamson, chief business economist at IHS Markit stated that jobs growth slowed to the lowest level since July of 2020 as companies failed to find suitable staff.
Flash services sector PM dropped to 55.2 from 59.9 in July. Flash manufacturing PMI dropped to 61.2 in August from July’s all-time high of 63.4. The US PMI data signals the pace of economic expansion is tailing off after two consecutive quarters of growth above 6%.