US private sector rebounds in August as states reopen
The US private sector grew at the fastest pace in a year and a half in August, according to preliminary survey data that showed both services and manufacturing expanding strongly.
The IHS Markit composite purchasing managers’ index – a respected gauge of business output – rose to 54.7 in August from 50.3 in July.
A score above 50 indicates contraction, and August’s figure was the strongest in 18 months, data firm IHS Markit said. Both the services and manufacturing sectors beat analysts’ expectations.
However, the US economy is far from recovering its pre-coronavirus size after shrinking by a record amount in April.
Data yesterday showed that new jobless claims unexpectedly rose back above 1m last week. That suggests the economic recovery could yet stumble.
It comes as Republicans and Democrats remain at loggerheads over the next round of economic stimulus.
The two sides are divided on extra unemployment benefits, among other issues. Earlier this week Republicans floated a stripped-back bill that was unlikely to be supported by Democrats.
IHS Markit said company managers reported stronger client demand in August. Overall, firms said new business rose for the first since February.
The reopening of economies around the world also boosted export orders, the survey showed.
Sian Jones, economist at IHS Markit, said there was a “renewed increase in sales among service sector firms”. She said this “was welcome news following five months of declines”.
“Encouragingly, firms signalled an accelerated rise in hiring,” she added. “Greater new business inflows led to increased pressure on capacity.”
“However, expectations regarding output over the coming year dipped slightly from July due to uncertainty stemming from the pandemic and the upcoming election.”