Economic activity in the services sector grew in August for the third consecutive month, according to purchasing and supply executives in the latest ISM Services PMI Report. The Services PMI indicated expansion at 52%, above the 50-percent breakeven point for the 13th time in the last 14 months.
The report was issued by Steve Miller, chair of the Institute for Supply Management (ISM) services business survey committee.
“In August, the Services PMI registered 52%, 1.9 percentage points higher than the July figure of 50.1% and in expansion territory for the third month in a row. The Business Activity Index remained in expansion in August, registering 55%, 2.4 percentage points higher than the reading of 52.6% recorded in July. This index has not been in contraction territory since May 2020. The New Orders Index also remained in expansion in August, with a reading of 56%, up 5.7% from July’s figure of 50.3%. The Employment Index was in contraction territory for the third month in a row and the fifth time in the last six months; the reading of 46.5% is 0.1 percentage point higher than the 46.4% recorded in July,” Miller said. “The Supplier Deliveries Index registered 50.3%, 0.7 percentage point lower than the 51% recorded in July and matching the June reading. This is the ninth consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM PMI Reports index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.)”
“The Prices Index registered 69.2% in August, a 0.7-percentage point decrease from July’s reading of 69.9%. The index has exceeded 60% for nine straight months, its longest such streak since 30 consecutive readings above 60% from October 2020 to March 2023,” Miller said. “The Inventories Index was in expansion territory in August for its third month in a row, registering 53.2%, an increase of 1.4 percentage points from July’s figure of 51.8%. The Inventory Sentiment Index expanded for the 28th consecutive month, registering 55.5%, up 2.3 percentage points from July’s figure of 53.2%. The Backlog of Orders Index was in contraction territory for the sixth month in a row, registering 40.4% in August, 3.9-percentage points below the July figure of 44.3% and the lowest reading since May 2009 (40%).”
“Twelve industries reported growth in August, one more than in July. The Services PMI has expanded in 11 of the last 12 months, but the August reading of 52% is 0.4 percentage point below the 12-month average reading of 52.4%,” Miller said. “August’s Services PMI level showed greater strength, driven by faster expansion rates for the Business Activity and New Orders indexes. Offsetting these positive indicators, however, are continued contraction in the Employment Index, a 16-year low for the Backlog of Orders Index, and the Prices Index remaining near 70%. Commentary once again was led by respondents’ increasing citations of tariff impacts, with some indication that business activity and imports are being driven by an attempt to get ahead of additional price increases while preparing for the holiday peak season.”
The 12 services industries reporting growth in August — listed in order — are:
- Information
- Wholesale trade
- Arts, entertainment and recreation
- Mining
- Transportation and warehousing
- Educational services
- Professional, scientific and technical services
- Retail trade
- Utilities
- Health care and social assistance
- Public administration
- Real estate, rental and leasing
The four industries reporting a contraction in the month of August are
- Accommodation and food services
- Management of companies and support services
- Other services
- Construction
