The U.S. services sector experienced an unexpected increase in activity during the month of August, extending its expansion streak for the eighth consecutive month. The services-activity index, released by the Institute for Supply Management (ISM), revealed a figure of 54.5 for August, surpassing July's reading of 52.7. Economists had initially predicted a slower rise to 52.5.
With any reading above 50 indicating growth in the sector, this consistent expansion since the start of the year reflects the remarkable resilience of the services industry, which has persisted despite the challenges brought on by the global pandemic in early 2020.
Anthony Nieves, the chair of the ISM Services Business Survey Committee, stated that while there are variations in sentiment among respondents from different industries, a majority remain positive about the overall business and economic conditions.
August saw an increase in the business-activity index, rising from 57.1 to 57.3. Additionally, the new-orders, prices, and inventories indexes all demonstrated similar growth compared to the previous month. The supplier-deliveries index, which portrays the impact of higher demand on delivery times (inverted scale), also experienced an uptick from 48.1 to 48.5.
The employment index displayed acceleration in August, indicating that the services job market remained highly competitive. "The labor market remains very competitive," noted one survey respondent.
Out of the various industries surveyed, thirteen reported growth in August, with real estate, rental & leasing, and accommodation & food services leading the way. On the other hand, five industries reported a decrease in activity, including agriculture, forestry, fishing & hunting, and mining.
While overall conditions appear favorable, there has been a noticeable slowdown in residential construction due to rapidly increasing interest rates. This observation was made by one respondent from the rental & leasing sector.