US service sector grows at fastest pace since 2005

<p>US service sector showed positive results in July.</p>

Companies in the US service sector grew at the fastest pace since December 2005, according to new data released today (August 5th). The Institute for Supply Management said that its service-sector index jumped to 58.7, up from 56 in June. 

The positive data suggests that Americans are increasingly confident that the country's economy is recovering. The services survey covers businesses that employ 90 per cent of the workforce, including retail, construction, health care and financial services firms.

"The services part of the economy looks to be just fine,” Stan Shipley, an economist at International Strategy & Investment Group LLC in New York, told Bloomberg.

"We’re on a trajectory of roughly three per cent GDP growth," he added. 

Despite positive service industry figures, the United States stocks opened lower today, weighed by earnings, including those of retailer Target, and concerns over the health of the Chinese economy after weak service sector data.

Asian stocks also fell today after new figures showed that China's service sector companies were not performing well in July.

The China services purchasing managers’ index (PMI) compiled by HSBC/Markit fell to 50.0 in July from a 15-month high of 53.1 in June.

"The weakness in the headline number likely reflects the impact of the ongoing property slowdown in many cities, as property-related activity, such as agencies and residential services, see less business," Qu Hongbin, HSBC chief economist for China, said in a statement.

The Dow Jones industrial average fell 0.44 per cent, to 16,496.26 at 11:11 ET in New York, while the Standard & Poor's 500-stock index lost 0.30 per cent, to 1,933.25.

Find up to date information on the FTSE 100 and spread betting strategies at City Index.


Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.