8th September 2016

Architas: Further blow to US economy – non-manufacturing index drops

In figures out today the US non-manufacturing index dropped to 51.4 in August, from 55.5 in July, below market expectations and the lowest level since February 2010.

Solomon Nevins, investment manager, Architas, said:

“Following on from last week’s weak manufacturing data this sharp fall in service sector activity is a blow to the outlook for the US economy. With unemployment also flat last month the prospect of any rate rise in September has been severely dented.

“While these latest numbers are unlikely to be enough to derail the Federal Reserve from taking some action by the end of the year they will certainly be a factor in their deliberation.

“Overall the latest downbeat manufacturing and non-manufacturing surveys cast doubt on recent optimism of a stronger US economy. However, we think there is a reasonable chance for an improvement in corporate earnings and GDP growth for the remainder of the year. We are maintaining our neutral allocation to the US for now while favouring large-cap, quality stocks with a domestic bias.”

Investments, Investment Commentary