US Services Activity Expands at Fastest
Activity at US service providers expanded in August at the fastest pace in six months on the sharpest acceleration in orders in nearly a year.
The Institute for Supply Management’s index of services rose 1.9 points last month to 52, the group said Thursday. Readings above 50 indicate expansion, and the figure topped all but one estimate in a Bloomberg survey of economists.
The new orders index jumped 5.7 points, the most since September, to 56. The business activity index, which parallels the ISM's factory output gauge, climbed to a five-month high of 55.
The solid advance in those demand indicators suggests the largest part of the economy is gaining some traction after five straight months of sluggishness. At the same time, a measure of materials costs showed service providers continued to battle a stiff inflationary headwind.
While the group's prices-paid index eased, the August reading of 69.2 was the second-highest since late 2022 and showed the impact of tariffs.
Other details of the report were mixed. A gauge of order backlogs dropped to the lowest level since 2009, helping explain why service providers were in no rush to expand headcount.
The ISM employment index was little changed at 46.5, the third straight month of contraction and one of the weakest readings since the pandemic.
Sustained growth in orders and business activity is likely needed to encourage companies to step up hiring. Government data released Wednesday showed job openings in July fell to a 10-month low, underscoring less appetite for labor.
Meanwhile, the ISM report showed service companies have been successfully navigating supply-chain disruptions to ensure they have enough goods and materials to meet demand. A measure of stockpiles swelled to one of the fastest rates in the past year, while a related gauge of firms' assessment of inventory sufficiency also increased.
Sumber: Bloomberg
