Following Manufacturing PMI’s drop from a two-month bounce, Services PMI also tumbled. Against expectations of a rise from 51.4 to 51.8, Services dropped to 50.9 – lowest since Feb 2016. With the lowest jobs data in 20 months, new orders at their weakest since May, as Markit warns, “GDP growth is failing to accelerate in the third quarter from the weak 1.2% pace seen in the second quarter.”
“but but but , the Services economy will save us…”
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at Markit said:
“The ongoing lacklustre economic growth signalled by the flash PMI suggests GDP growth is failing to accelerate in the third quarter from the weak 1.2% pace seen in the second quarter.
“Historical comparisons indicate that the PMI is signalling an annualised GDP growth rate of just under 1% in the third quarter, based on the data for July and August.
“With job creation also waning alongside subdued price pressures (the August PMI is consistent with non-farm payrolls rising by just under 130,000), the survey data will fuel expectations that the Fed will be in no rush to tighten policy again.
“However, as anecdotal evidence from the survey suggests that business activity is being dampened by uncertainty due to the upcoming presidential election, there’s a good chance that the economy will pick up speed again after the vote, leaving a December rate hike on the table.”
Who could have seen that coming? A recessionary collapse in manufacturing led to a services economy plunge? Just don’t tell Obama, The Fed, or CNBC.
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