The services sector expanded at the slowest pace in seven months in August as the Institute for Supply Management’s non-manufacturing business activity composite index fell to 51.5 in data released Friday.
Readings above 50 signal an expanding economy and economists polled by Thomson Reuters had expected a 53.5 level. The seasonally adjusted index was at 54.3 in July.
“The drop in the August reading is consistent with recent reports from small business indicating deterioration in overall operating conditions,” Brian Bethune, chief U.S. financial economist at IHS Global Insight, said in a research note. “The economy is struggling to stand on its own two feet as a number of policy props start to fade in terms of their impact on demand.”
The prices paid component, which is closely watched by economists for signs of inflation, rose to 60.3 from 52.7. The employment index fell to 48.2 from 50.9.
The business-activity production index fell to 54.4 from 57.4, the new orders index slipped to 52.4 from 56.7, backlog of orders dropped to 50.5 from 52.0, and new export orders fell to 46.5 from 52.0.
Meanwhile, inventories decreased to 53.5 from 55.5, inventory sentiment rose to 60.0 from 59.0, the supplier deliveries index fell to 51.0 from 52.0, and imports rose to 50.5 from 48.0.
