Economic activity in the services sector continued to expand in August. The ISM Services Index indicated expansion at 55.4%, the 26th consecutive month in expansion territory. A value above 50 reflects expansion in the services sector while a value below 50 represents a contraction.
“In January, the Services PMI® registered a reading of 55.4%, the same as the seasonally adjusted December figure of 53.8% an increase of 1.3 percentage points (pp) compared to July’s figure of 54.1%. The Business Activity Index remained in expansion territory in August, increasing 2.6 pp to 61.7 percent from July’s reading of 59.1%,” said Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee. Respondents from construction said, “The bond market pushed 30-year mortgage rates up to 6.67 percent, reducing affordability and moving prospective buyers back to the sidelines. The new-build housing market continues to slow with the selling season coming to a close and the start of the new school year. Rate buydowns and discounts have become the norm instead of the tool to drive traffic.”
The New Orders Index remained in expansion territory at 60.9% in August, 3.7 pp higher than the reading of 57.2% in July. The index has expanded for 15 consecutive months. Comments from respondents include: “Higher attendance in theaters driving higher demand” and “Large capital investments in transmission and generation services are leading to increased business activity, from head count to material purchasing and planning out items for long lead times.”
The Inventories Index expanded for the seventh month in a row, registering 56.7%, a 5.3 pp increase compared to the 51.4% reported in July. Services Inventory Sentiment Index was in expansion (or “too high”) territory for the 40th consecutive month in August; the reading of 54.1% is an increase of 1.6 pp compared to July’s figure of 52.5%. The Backlog of Orders Index registered 55.6%, a 4.7 pp increase compared to the 50.9% reported in July. The index has been in expansion territory for seven straight months, its longest continuous growth since a string of 26 months that ended in February 2023.
Read the ISM release.
