US economy cools more sharply than expected in August, surveys indicate

US economic activity slowed more sharply than expected last month as the Delta variant of Covid-19 hit demand for services and supply chain disruptions hit record highs, the results of two closely-followed surveys revealed.

IHS Markit's services sector Purchasing Managers's Index slipped from a reading of 59.9 for July to 55.2 in August (consensus: 59.2).

In parallel, a rival PMI for manufacturing dropped from 63.4 to 61.2 (consensus: 63.0).

Commenting on the latest survey readings, Chris Williamson, chief business economist at IHS Markit said: "The expansion slowed sharply again in August as the spread of the Delta variant led to a weakening of demand growth, especially for consumer-facing services, and further frustrated firms’ efforts to meet existing sales.

"Not only have supply chain delays hit a new survey record high, but the August survey saw increasing frustrations in relation to hiring. Jobs growth waned to the lowest since July of last year as companies either failed to find suitable staff or existing workers switched jobs."

Williamson also said that prices looked set to continue rising "sharply" due to those same shortages of materials and labour, although a further cooling in demand might act as a partial offset.