Date
28 July 2017
A severe winter storm, among other factors, led to reduced service sector activity in the US. Photo: Bloomberg
A severe winter storm, among other factors, led to reduced service sector activity in the US. Photo: Bloomberg

US services sector shrinks for first time in more than two years

The US services sector shrank this month for the first time in more than two years, data suggested Wednesday, adding to worries of slowing growth in the world’s biggest economy.

According to Markit Economics’ preliminary figures, the US services purchasing managers’ index for February stood at 49.8, down from 53.2 in the previous month and marking the weakest reading since October 2013.

A reading below 50 indicates contraction.

The slide in services activity came after a winter storm paralyzed much of northeastern US at the end of last month, Bloomberg News reported.

Additionally, the turmoil in financial markets, concern about slowing global growth and the possibility of further Fed rate hikes weighed on service providers, Chris Williamson, Markit’s chief economist, was quoted as saying in a statement.

“Any bounce-back from the weather may therefore prove to be only a temporary improvement in a steady downward trend in business conditions,” Williamson wrote.

“Slumping business confidence and an increased downturn in order backlogs suggest there’s worse to come.”

Markit’s data showed new orders cooled so far this month, leading to the biggest reduction in backlogs since April 2014, Bloomberg noted.

The group’s measure of the outlook over the next 12 months was the weakest since August 2010.

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FL/RC

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