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Trade war concern drags US private-sector output growth to 3-year low


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Trade war concern drags US private-sector output growth to 3-year low

Growth in U.S. private-sector output weakened more than expected in May, dropping to its lowest level in three years as companies fretted over global trade tensions, according to monthly survey data from IHS Markit.

The IHS Markit flash U.S. Composite Output Index, a weighted average of manufacturing output and services business activity, fell to 50.9 in May from 53.0 in April, signaling the slowest rate of overall expansion since May 2016.

The Econoday median estimate saw a decline to 52.4. An index reading above 50 indicates growth.

The flash manufacturing PMI registered its weakest reading in 116 months, falling to 50.6 from 52.6. The Flash Manufacturing Output index dropped to 50.8, a 35-month low, from 52.7. The flash services business activity index sank to a 39-month low of 50.9 from 53.0.

"Growth of business activity slowed sharply in May as trade war worries and increased uncertainty dealt a further blow to order book growth and business confidence," IHS chief business economist Chris Williamson said, noting that business confidence slumped to its lowest since at least 2012.

Williamson said trade tensions remained the top concern among manufacturers, along with slowing sales and weaker economic growth.

With the sharp decline in private-sector output growth in May, Williamson warned that the worst may be yet to come, as the rate of new business growth recorded this month was the softest since October 2009.