Concerns over the health of the US economy have grown following the publication of an influential report showing the first decline in service-sector business activity since October 2013.
“The PMI data show a significant risk of the US economy falling into contraction in the first quarter,” said Chris Williamson, the chief economist of Markit, which published the US purchasing managers’ index of service sector performance, one of the bellwethers of economic activity, on Wednesday.
“The flash PMI for February shows business activity stagnating as growth slowed for a third successive month. Slumping business confidence and an increased downturn in order book backlogs suggest there’s worse to come,” said Williamson.
He said adverse winter weather had played a part in the downturn and that there could be some bounce-back from an improvement in March.
However, he added: “Any bounce-back from the weather may therefore prove to be only a temporary improvement in a steady downward trend of business conditions.”
US service providers said overall business activity declined slightly in February, ending a 27-month period of sustained growth. At 49.8, the seasonally adjusted business activity index was down sharply from 53.2 in January.
Service providers remain optimistic about the outlook for business activity over the next 12 months. However, the latest data indicated that the drop in the degree of confidence since January was the lowest recorded for five and a half years.
This article was written by David Hellier, for theguardian.com on Wednesday 24th February 2016 19.51 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010