The US economy had a tough first month of 2016, according to survey data published today.
The Institute for Supply Management's non-manufacturing purchasing managers' (PMI) index dropped to a score of 53.5 in January, its lowest since early 2014. Scores above 50 imply the non-manufacturing sectors grew over the month. However, January's score suggests economic growth slowed compared with December when the PMI was 55.9.
The bulk of the PMI published today compiled from businesses in the service sector, which makes up 80 per cent of the US economy. The manufacturing PMI for January also hit a low score, suggesting the economy struggled overall.
Businesses said price growth had fallen sharply into negative territory, while they had cut back on hiring. Sales growth also declined along with new orders.
The majority of the respondents’ comments are positive about business conditions; however, there is a concern that exists relative to global conditions, stock market volatility, and the effect on commercial and consumer confidence.
“The slide in the Institute for Supply Management’s non-manufacturing sentiment survey is a nasty surprise for those who remain convinced the US economy is firing on all cylinders and incapable of tipping back into recession," said Russ Mould, investment director at AJ Bell.
“This will only add to concerns the US Federal Reserve made a mistake by raising rates in December and that the American economy is losing momentum – and fast.”