(Reuters) - U.S. business activity fell to a 4-month low in August and firms continued to struggle to pass on higher prices to consumers, bolstering the likelihood that inflation will stay on a downward trend over the coming months.
S&P Global said on Thursday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, edged down to 54.1 this month, a still healthy level among the highest measured over the past two years. That followed a final reading of 54.3 in July.
A reading above 50 indicates expansion in the private sector. A slight pick-up in the services sector was outpaced by an easing in the manufacturing industry.
Average prices charged for goods and services rose at the slowest rate since January and are now at levels that S&P Global viewed as consistent with the Federal Reserve's 2% inflation target. This echoed reports from businesses that customers are pushing back against high prices, through bargain hunting, scaling back on purchases and trading down to lower-priced substitutes.
Inflation in July on an annual basis slowed to below 3% for the first time in nearly 3-1/2 years, the Labor Department reported last week.