US August ISM Services 51.5 vs 51.1 Expected
Recent Data on US ISM Services
The Institute for Supply Management (ISM) reported on Thursday that the US services sector expanded in August at a slower pace than in July. The ISM non-manufacturing index fell to 56.9 in August from 59.9 in July, compared to the market expectation of 59.1.The employment component of the ISM non-manufacturing index rose to 53.1% in August from 51.4% in the previous month. The business activity index came in at 60.3% versus 61.8% a month ago. Meanwhile, the new orders index declined to 59.6% from 61.9% in July.
Economists' Interpretation
"The services sector continues to be a bright spot in the US economy, but the pace of growth is moderating," said Oren Klachkin, Lead US Economist at Oxford Economics. "This is consistent with our view that the economy is slowing but not contracting."Pantheon Macroeconomics' Ian Shepherdson said: "The ISM services index gave some ground in August, but this follows a rip-roaring recovery in the prior two months. The details were solid enough, suggesting that the sector has plenty of forward momentum."
Further Implications
The ISM services index is a leading indicator of economic activity in the United States. The index is based on a survey of more than 370 non-manufacturing businesses. The index measures the overall health of the services sector, including business activity, new orders, employment, and prices.A reading above 50 indicates that the services sector is expanding, while a reading below 50 indicates that the sector is contracting. The August ISM services index reading of 56.9 suggests that the services sector is still expanding, but at a slower pace than in recent months.
The slowdown in the services sector is likely due to a number of factors, including the ongoing COVID-19 pandemic, rising inflation, and interest rate hikes by the Federal Reserve.
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