WASHINGTON (Reuters) - U.S. business activity increased to a six-month high in July, but companies reported a drop in new orders as a resurgence in new COVID-19 cases across the country weighed on demand.
Data firm IHS Markit said on Friday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rose to a reading of 50.0 this month from 47.9 in June. The increase ended five straight monthly contractions.
A reading above 50 indicates growth in private sector output. The economy slipped into recession in February.
Coronavirus infections have sky-rocketed, forcing some authorities in the hard-hit South and West regions to either shut down businesses again or pause reopenings.
IHS Markit said some service providers were struggling with the reintroduction of lockdown measures. The survey’s flash composite new orders index slipped to a reading of 49.5 this month from 49.9 in June.
Its services sector flash PMI increased to 49.6 from a reading of 47.9 in June. Service industry firms reported a faster pace of decline in new orders in July. In contrast, manufacturing firms signaled the strongest expansion in new orders since January.
Economists polled by Reuters had forecast a reading of 51 for the services sector, which accounts for roughly two-thirds of the U.S. economy.
Factory activity rebounded this month, with the flash manufacturing PMI increasing to a six-month high of 51.3 from a reading of 49.8 in June. Economists had forecast the index for the sector, which accounts for 11% of the economy, advancing to 51.5 in July. A measure of new orders received by factories climbed to a reading of 51.8 from 50 in June.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama