US services sector expands at fastest pace since May: Markit

NEW YORK (REUTERS) - US services sector growth edged ahead during August from July to its highest level since May, signaling the United States was on track for solid third-quarter expansion, an industry report showed on Thursday.

Financial data firm Markit said in its final reading of its Purchasing Managers Index for the sector that average prices charged by US service businesses however had declined in August, ending 25 straight months of increases.

"Inflationary pressures have abated, which will help the argument that interest rate hikes can be delayed," said Chris Williamson, Markit's chief economist.

Markit's final PMI was 56.1 in August, a slight improvement from the preliminary reading of 55.2 and up from 55.7 in July, according to a news release.A reading over 50 marks expansion in economic activity.

A subindex of new business growth fell to 55.7 in August from 57.4 in July.

The firm's composite index, a weighted average of the manufacturing and services indexes, was flat month over month in August at 55.7, which was an increase from its preliminary reading of 55.