US service sector exceeds expectations in August

According to data released by the Institute for Supply Management in the US, the services index increased by 1.3 points to 55.4 in August, seeing its highest level since February.

Strong Rise in Services Index

According to data released by the Institute for Supply Management, the US services index increased by 1.3 points to 55.4, reaching its highest level since February. This announced rate came in above the expectations of Bloomberg economists, which stood at 54.1.

New Orders and Activities

Growth in new orders reached its fastest level since the beginning of 2023. The business activity indicator recorded its strongest level since 2022, while order backlogs increased for the seventh consecutive month.

Support Factors and Costs of the Sector

The US service sectors received support from resilient consumer spending, a stable labor market, and healthy business investments. On the other hand, the sector had to contend with supply chain disruptions, tariffs, and rising costs.

Prices and Employment Indicators

ISM's prices paid index for materials and services rose to 72.6 in August, reaching its highest level since mid-2022. Meanwhile, the employment indicator continued to signal contraction in five of the last six months.