Markit's flash US services PMI unexpectedly drops in August

Markit’s flash US services purchasing managers’ index printed at 50.9 in August, remaining above the 50.0 threshold that separates contraction from expansion but below July’s 51.4.

This marked the lowest level since February and was weaker than consensus expectations for a reading of 52.0.

Adjusted for seasonal influences, the flash US Composite PMI Output Index nudged down to 51.5 from 51.8 in July.

Chris Williamson, chief economist at Markit, said: “The August Markit flash PMI surveys indicate that the US economy continued to expand at only a modest pace in August. Slower growth of demand and subdued business optimism also caused employment growth to slow to the weakest for over two years. Price pressures meanwhile remained muted.

“With job creation also waning alongside subdued price pressures, the lacklustre survey results will fuel expectations that the Fed will be in no rush to tighten policy again.

“However, as anecdotal survey evidence suggests that business activity is being dampened by uncertainty due to the upcoming presidential election, there remains a case for the economy to pick up speed again after the vote, leaving a December rate hike on the table.”