Danske Bank analysts suggest that in another sign that the global economic slowdown is making its mark on the US economy, yesterday it became blindingly obvious that the service sector cannot go unabated amid a widespread manufacturing slump.

“European PMIs came out on the soft side throughout the day, but it was notably a very weak US non-manufacturing ISM that made markets react more profoundly. The headline dropped to 52.6 (from 56.4 last), a 3Y low, as not least, new orders and the employment sub-index witnessed big declines. Taken together, this week's ISM reports now signals US growth of a mere 1% q/q (ar). This adds further support to our call for another Fed cut later this month, even if the Fed's Clarida yesterday reiterated that it is one meeting at a time and that the US economy is in a 'good place'.”