Business Activity Keeps on Trucking in August
More data was released suggesting that the US economy is turning around. On Friday, the IHS Markit composite purchasing manager index for August was released. It rose to 54.7, up from 50.3 in July, an 18 month high. A number above 50 suggests that business is expanding.
‘Driving the overall upturn in output was stronger client demand,’ IHS Markit said in a release. ‘Total new business rose for the first time since February and at a solid rate. Manufacturing firms registered a steeper expansion in new order inflows than in July, while service providers signaled a renewed increase in sales.’
Manufacturing output rose from 50.9 in July to 53.6 in August. Services rose from 50 to 54.8.
While business activity may be seeing an upswing in the United States, it headed in the opposite direction elsewhere. The composite purchasing manager’s index fell from 54.9 to 51.6 in Europe, reflecting large declines in tourism. Japan’s index stayed at 44.9 from July to August, failing to climb out of contraction range.
The United States economy fell into a recession in February, according to the National Bureau of Economic Research. The economy shrank by a staggering 32.9% annualized from April through June, confirming the diagnosis. Many economists expect a recovery in the second half of the year, though it has been choppy and tenuous thus far. Two bright spots are housing data and retail sales. On the other hand, new unemployment applications rose above 1 million last week, after falling below that number for the first time since March. A report from the Federal Reserve last week found that industrial production was on the rise, though it is still 8.2% lower than it was one year ago.
