The U.S. economic expansion is losing momentum.
Softening demand at a time of rising Covid-19 cases, labor shortages and persistent knots in shipping networks are restraining businesses in the U.S. and across the globe, according to private-sector surveys released Monday.
The biggest shifts are occurring in the U.S., which has helped drive the global economic expansion since last year’s severe recession. U.S. factories and service providers reported sharply slower growth in August, the forecasting firm IHS Markit said Monday in its surveys of purchasing managers. Its index of service-sector activity, the broadest segment of the economy, fell to 55.2 last month from 59.9 in July, hitting an eight-month low. An index of factory activity dropped to 61.2, a four-month low, from 63.4 in July. A reading above 50 suggests activity—as measured by sales, output, prices and other factors—is growing.
But the surveys show that the Delta variant of the Covid-19 virus, which has led to a new wave of infections and hospitalizations and has spooked consumers, is harming the economy.
“The expansion slowed sharply again in August as the spread of the Delta variant led to a weakening of demand growth, especially for consumer-facing services, and further frustrated firms’ efforts to meet existing sales,” Chris Williamson, chief business economist at IHS Markit, said.
