US services sector activity slows further in August, S&P says

Services sector activity in the US slowed a tad more than anticipated during the previous month, the results of a survey showed.

S&P Global's services Purchasing Managers' Index slipped from a July reading of 52.3 to 50.5 in August (consensus: 51.0).

July's services PMI originally been reported as 51.0.

A further decline in new business dragged on output growth, the survey compiler said, due to interest rate hikes and high inflation.

New orders registered only a fractional decline, but that was nevertheless the first drop in six months and a marked turnaround on the sharp upturn seen over the three months to June, S&P added.

Staff numbers meanwhile rose at their slowest clip in almost a year.

Commenting on the latest survey readings, Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "The PMI numbers for the third quarter so far point to a faltering of economic growth after a robust second quarter, as a renewed manufacturing downturn is accompanied by a deteriorating picture in the service sector.

"[...] Persistent wage growth is meanwhile being accompanied by renewed upward pressure on energy, fuel and transport costs, as well as some broader firming of materials prices, driving cost growth higher. Competitive forces have kept a lid on selling price inflation, but the rate of increase of service sector charges remains elevated to the extent that consumer price inflation is likely to remain stubbornly above the Fed's target in the coming months."