Economic activity in the services sector expanded for the second consecutive month in August, according to the latest services Report On Business by the Institute for Supply Management (ISM). The Services PMI registered 51.5%, indicating sector expansion in six of eight months in 2024. This month’s reading indicates sector expansion for the 48th time in 51 months.
“In August, the services PMI registered 51.5%, 0.1 percentage point higher than July’s figure of 51.4%. The reading in August marked the sixth time the composite index has been in expansion territory in 2024,” The report was issued by Steve Miller, chair of the ISM services business survey committee. “The business activity index registered 53.3% in August, which is 1.2 percentage points lower than the 54.5% recorded in July and indicated continuing expansion after one month of contraction in June. The new orders index expanded to 53% in August, 0.6 percentage point higher than July’s figure of 52.4%. The employment index expanded for the third time in 2024; the reading of 50.2% is a 0.9-percentage point decrease compared to the 51.1% recorded in July.”
“The supplier deliveries index registered 49.6%, two percentage points higher than the 47.6% recorded in July. The index remained in contraction territory for the second straight month — indicating faster supplier delivery performance — in August after two months in ‘slower’ territory. (Supplier Deliveries is the only ISM Report On Business index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.),” Miller said. “The prices index registered 57.3% in August, a 0.3-percentage point increase from July’s reading of 57%. The inventories index returned to expansion territory in August after two consecutive months of contraction, registering 52.9%, an increase of 3.1 percentage points from July’s figure of 49.8%. The inventory sentiment index (54.9%, down 8.3 percentage points from July’s reading of 63.2%) expanded for the 16th consecutive month. The backlog of orders index returned to contraction territory for the second time in the last three months, registering 43.7% in August, a 6.9-percentage point decrease from the July reading of 50.6%.”
“Ten industries reported growth in August. The services PMI has expanded in 18 of the last 20 months dating back to January 2023, and the August reading is equal to the 51.5% index average for 2024,” Miller said. “The increase in the services PMI in August is due to all directly factoring indexes (business activity, new orders, employment and supplier deliveries) with readings close to or above 50%. The supplier deliveries index was in mild contraction (faster) territory in August. For a second straight month, the slow growth indicated by the services PMI reading was reinforced by panelists’ comments. Slow-to-moderate growth was cited across many industries, while ongoing high costs and interest-rate pressures were often mentioned as negatively impacting business performance and driving softness in sales and traffic. Although the inventories index increased by 3.1 percentage points into expansion territory in August, many respondents indicated their companies are still actively managing down their inventories.”
The 10 services industries reporting growth in August — listed in order — are:
- Arts, entertainment and recreation
- Mining
- Transportation and warehousing
- Other services
- Information
- Health care and social assistance
- Finance and insurance
- Public administration
- Educational services
- Utilities
The seven industries reporting a decrease in the month of August — listed in order — are:
- Agriculture, forestry, fishing and hunting
- Retail trade
- Construction
- Wholesale trade
- Accommodation and food services
- Management of companies and support services
Professional, scientific and technical services
