US services firms register slowest growth since 2010

The index has run above the 50 threshold for 79 straight months.

Economic activity in the USA non-manufacturing sector grew in August for the 79th consecutive month, according to the nation’s purchasing and supply executives in the Non-Manufacturing Institute for Supply Management’s latest monthly “Report On Business”.

In this Wednesday, Jan. 27, 2016, file photo, Nicole Kelly, right, interviews Justin Rushing for a server job at a job fair held by The Genuine Hospitality Group, in Miami.

The seven industries reporting contraction in August were: Other Services; Mining; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Wholesale Trade; Retail Trade; and Arts, Entertainment & Recreation.

Analysts had expected the index to drop to 55.0.

The US ISM Non-Manufacturing/Services survey for August disappointed expectations significantly, coming in at 51.4 versus expectations of 54.9, according to a Bloomberg News survey.

The prices index decreased 0.1 percentage point from the July reading of 51.9 percent to 51.8 percent, indicating prices increased in August for the fifth consecutive month.

Putting this in context with with the August US ISM Manufacturing survey, which disappointed last week with a print of 49.4 versus expectations of 52.0, it’s evident that Q3’16 US growth expectations may be a bit overcooked. He says the ISM services reading gives the Federal Reserve another reason to delay an interest rate increase at its September meeting. Its services survey covers businesses that employ the vast majority of workers, including retail, construction, health care and financial companies. The U.S. economy grew 1.0 percent in the first half of the year.

The ISM is a trade group of purchasing managers. Of those, nearly all – 150,000 – were generated by private services firms. It has signaled continuous expansion since early 2010, though growth has slowed over the past year.

Moreover, employment in the private sector, excluding manufacturing, rose 140,000 in August, bringing the three-month average to 196,000, implying that service sector companies continue to be upbeat about the outlook, added Societe Generale.

With factories still trying to regain their footing after the combined hit from the stronger dollar, lower oil prices and sluggish global markets, the task of propping up economic growth has been falling to non-manufacturing industries.