Economic growth in the US decelerated in August as demand softened amid the resurgence of COVID-19 pandemic cases, labor shortages, supply constraints, and continued shipping hurdles.
The US, like many other countries with global manufacturing businesses, is seeing restricted growth, according to data firm, IHS Markit. Factories and service providers in the US reported much slower expansions and hiring difficulties in August. The IHS Markit’s manufacturing purchasing managers index (PMI), which makes up almost 12pc of the economy, fell to 61.2 indicating a four-month low versus a record-high of 63.4 in July.
The survey’s US composite PMI output that marks activity in the manufacturing and services segments, dipped to 55.4 in August from 59.9 last month, the lowest level since Dec 2020. Raw material shortages are increasingly affecting production and new orders in these sectors.
The firm’s measure of PMI in the services sector, which represents the broadest segment at over two-thirds of economic activity in the US, decreased to 55.2 in August compared to 59.9 in July.
US consumer spending, the largest driver of economic demand was reduced in July while the US housing market upheld its strength last month. Sales were up 2pc in July against June to an adjusted annual rate of $5.99mn, rising from a 1.6pc increase in June, with July sales up 1.5pc from one year prior, per reports.
The surveys also indicated that the European economy decelerated in August, but not as much as the US. The composite PMI for the eurozone dropped to 59.5 in August from 60.2 in July.
PMI reviews in Japan and Australia indicate falling economic activity in August, as a result of the increasing governmental restrictions in response to the Delta variant. The PMI for Japan fell to the lowest point in a year, while Australia’s rate sunk to the lowest point in 15 months.
Economies in Asia are also dealing with steep increases in COVID-19 infections, which may hinder manufacturing growth. Per reports, analysts recently lowered the 2021 global growth forecast from 6.4pc to 5.9pc.