Growth in service-based businesses helped a measure of private-sector activity reach its highest level since May 2015, according to a report released Wednesday.
The purchasing managers' flash U.S. composite output index compiled by data provider IHS Markit rose to 56 in August from 54.6 in July.
Readings above the 50 mark separate expansion from contraction.
New order growth, fueled by strong economic conditions, helped lift the Flash U.S. Services Business Activity Index to reach a 28-month high in August. The index rose to 56.9 in August from 54.7 in July. Economists polled by the Wall Street Journal had forecast a services flash reading of 54.9. In August service-sector businesses also reported rising levels of new work and staff expansions rose, despite seeing a rise in input costs.
Business conditions improved in the manufacturing sector, but the pace of growth in August slowed from the prior month on weaker increases in output and new orders. The Flash U.S. Manufacturing PMI fell to 52.5 in August, down from 53.3 a month earlier. Economists polled by the Wall Street Journal had forecast a manufacturing flash reading of 53.
Chris Williamson, chief business economist at IHS Markit, said although manufacturing remained sluggish in comparison with the service sector, the acceleration in the overall economy "suggests that GDP growth is still gaining momentum during the third quarter." "With new order inflows also strengthening and job creation equalling its best pace in the year-to-date, economic growth should remain on course to outperform relative to the second quarter," he said in prepared remarks.
Markit's flash reading is based on about 85% to 90% of total PMI survey responses that go into the final report each month.
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(END) Dow Jones Newswires
August 23, 2017 10:58 ET (14:58 GMT)