- Prelim was 55.4
- Prior was 55.7
- Composite 54.6 vs 55.1 prior
The absolute number here is a solid one and suggests that the economy is ok at the moment but the declines in business optimism are forward looking and might be problematic. They could also simply reflect the chaotic nature of current US policymaking and never turn into a change in real demand.
The ISM survey is due at the top of the hour.
Chris Williamson, Chief Business Economist at S&P Global
Market Intelligence
“Although weaker than signaled by the preliminary ‘flash’
PMI reading, and below that seen in July, the expansion
of the service sector in August was still the second
strongest recorded so far this year. Together with a robust
manufacturing PMI reading, the surveys are consistent with
the US economy growing at a solid 2.4% annualized rate in the
third quarter.
“Fuller order books, reflecting a summer upturn in customer
demand, has meanwhile encouraged service providers to
take on additional staff in increasing numbers, accompanied
by a return to hiring in the manufacturing sector. While low
household confidence is reportedly keeping spending on
consumer services relatively subdued, demand for financial
services is showing especially strong growth amid improving
financial market conditions.
“However, the brighter news on current economic growth and
hiring is marred by concerns over future growth prospects
and inflation. Business optimism regarding the year ahead
outlook has dropped to one of the lowest levels seen over the
past three years amid escalating worries over the uncertainty
and drop in demand caused by federal government policy,
most notably tariffs, as well as the associated rise in price
pressures. Inflation concerns have been fanned by a further
steep rise in input costs which have fed through to another
marked increase in average charges for services.
“The survey data therefore point to some downside risks to
growth in the coming months while signaling upside risks to
inflation, as import tariffs feed through to prices charged for
both goods and services.”
This article was written by Adam Button at investinglive.com.