US manufacturing and services sector PMIs jump in July

Activity levels at both US factories and among services sector firms picked up substantially in August, according to the results of two closely-followed surveys.

IHS Markit's manufacturing sector Purchasing Managers' Index jumped from July's reading of 50.9 to 53.6 for August (consensus: 51.5).

Services activity also accelerated, with the PMI for that sector increasing from 50.0 to 54.8.

Expectations for output over the next year however dipped slightly, on account of the pandemic and the upcoming election.

Sian Jones, an economist at IHS Markit, highlighted the pick up in sales seen in services - the first in five months.

Jones said: "Encouragingly, firms signalled an accelerated rise in hiring, as greater new business inflows led to increased pressure on capacity. Some also mentioned that time taken to establish safe businesses practices had now allowed them to expand their workforce numbers."

Commenting on Friday's survey readings, Michael Pearce, senior US economist at Capital Economics, said: "While the Markit PMIs came in a bit stronger than we had anticipated, they have lagged behind alternative measures in recent months, including the ISM surveys and the regional Fed surveys, so this simply brings the Markit surveys more into line with the others.

"Still, with low levels of inventory boosting manufacturing and falling infection rates providing a more positive backdrop for the services sector, output looks set to continue grinding gradually higher from here."