Investing.com – Business activity in the U.S. private sector hit a 27-month high in August, bolstering optimism over the American economy, according to preliminary data released on Wednesday.
In a report, market research group IHS Markit said that its flash services purchasing managers’ index (PMI) rose to 56.9 in August, from the prior month’s reading of 54.7. That was a 28-month high.
Analysts had expected the reading to inch up to only 54.9.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
On the downside, IHS Markit also said that its flash manufacturing purchasing managers’ index (PMI) dropped to 52.5 in August from the prior month’s final reading of 53.3.
That was a two-month low and came out under forecasts for the reading to remain unchanged.
Meanwhile, the composite PMI, including activity in both sectors, rose to 56.0 in August from the previous month’s reading of 54.6. That was the fastest growth in overall activity since May 2015.
The report indicated that private sector companies signaled a “sharp and accelerated increase in business activity during August.”
IHS Markit director Rob Dobson qualified the preliminary survey as a “tale of two sectors”, noting the sluggish performance in the manufacturing sector as production volumes rose at the weakest pace in over a year.
“Nonetheless, the acceleration signaled for the economy as a whole suggests that GDP growth is still gaining momentum during the third quarter,” he concluded.
After the report, EUR/USD was trading at 1.1796 from around 1.1792 ahead of the release of the data, GBP/USD was at 1.2794 from 1.2795 earlier, while USD/JPY traded at 109.18 compared to 109.12 before the release.
The US dollar index, which tracks the greenback against a basket of six major rivals, was unchanged at 93.25.
Meanwhile, U.S. stocks were trading lower after the open. The Dow 30 fell 70 points or 0.32%, the S&P 500 lost 7 points, or 0.27%, while the tech-heavy Nasdaq Composite traded down 14 points or 0.23%.
Elsewhere, in the commodities market, gold futures traded at $1,292.72 a troy ounce, compared to $1,293.69 ahead of the data, while U.S. crude oil changed hands at $47.77, compared to $47.80 earlier.