The U.S. services sector declined for the second consecutive month in August, touching lows last seen in May, a survey released on Monday showed.
Leading financial research firm Markit Economics reported that its initial services Purchasing Managers Index plunged to 58.5 this month, compared with 60.8 in July and analysts’ forecast of 59.5 in a Reuters poll. A measure above 50 shows expansion of economic activity.
“The U.S. service sector continues to enjoy a strong growth phase, but the latest survey suggests the recovery has lost some momentum since hitting a post-crisis peak in June,” said Tim Moore, senior economist at Markit.
The sub-index tracking new business jumped to 58.2 compared with 57.3 in July, while confidence of the 12-month business outlook fell to the weakest level since November 2012. Markit’s initial composite PMI, a weighted average of services and manufacturing indexes, plunged to 58.8 from July’s reading of 60.6.
Meanwhile, sales of new U.S. single-family houses also declined for the second consecutive month in July, though rising stock of properties available for sale in the market and weaker price rises should boost demand in the coming months.
New home sales fell 2.4 percent to a seasonally-adjusted annual rate of 412,000 units, the weakest level since March, reported the Commerce Department. While sales lagged economists’ expectations, revised data indicated that 33,000 more homes were sold in the past three months than previously announced.
Shortage of available homes for sale and a surge in mortgage rates had sent prices soaring, weighing on sales in the second half of 2013, prompting the Federal Reserve to sound an alarm at the slow pace of housing market recovery. However, housing inventory is increasing while home price gains are slowing down this year. The median sales price rose 2.9 percent from the previous year, compared with June, when prices jumped 7.8 percent from a year earlier.To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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