US services sector experienced growth last month and employment in the private sector also increased, signaling a healthy economy amidst fears of a recession in the financial markets due to trade tensions.
On the other hand, there was a decline in the manufacturing sector last month as the trade war between the US and China escalates further, reports released on Thursday said.
Despite the growth in the services sector and private employment, the Federal Reserve may continue to reduce interest rates in this month as the trade war has caused harm to business confidence. Due to a slowdown in the global economy, the US central bank reduced the interest rates of loans in July.
The two parties in the trade war have decided to have a face to face negotiation in Washington next month, the Chinese commerce ministry said.
Noting that private employment has increased, chief economist at MUFG, Chris Rupkey, said that a recession does not involve such activity. This comes as the fears of a recession plague the economy.
The reading for the non-manufacturing sector’s activity index of the US economy increased from 53.7 in July to 56.4 in August, the Institute of Supply Management informed. Since the reading is above 50, it indicates the sector, which is two-third of the US economy, is experiencing expansion.
The Institute of Supply Management claimed that businesses show confidence in the conditions in general while are concerned about the import duties and uncertain environment in the global economy nonetheless.
The rate of increase in employment stands at over 100,000 jobs each month. This ensures that employment is at pace with the increasing working-age population. Economists expect that the unemployment rate would be at 3.7 percent in the last month for the third month consecutively.