U.S. ISM Services PMI Increases in August
Summary
- Service-sector total posts a healthy gain.
- New orders and employment readings strengthen.
- Prices index continues to move higher.
Service sector business activity in the U.S. economy increased last month, according to the Institute for Supply Management. The ISM Services PMI rose to 54.5 in August, more than reversing the dip in July, and reaching a six-month high. The August figure was well above the Action Economics Forecast Survey expectation of 52.9. A reading above 50 represents an increase in activity.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading released Tuesday. This index increased to 53.6 in August, the highest value since February. The strength of the composite index is mainly in services, as the manufacturing index remained well below 50. The series dates back to July 1997.
In the latest services survey, new orders increased 2.5 percentage points to a solid 57.5. An increased 29.4% (NSA) of respondents reported higher new orders in August while 17.0% reported fewer. The employment index jumped 4.0 percentage points to 54.7. An increased 18.1% (NSA) of respondents reported more hiring while 10.9% reported a decline. The business activity measure edged up to 57.3 in August from 57.1 in July. The business activity index has remained in the current range since early last year. The supplier deliveries index improved to 48.5 in August from 48.1, and remained in the same low range since late last year.
The prices index seems to have bottomed out in June at 54.1, after a steady sharp decline from a record 84.5 in December 2021. Since June the prices index has risen to 58.9. A fairly steady 22.7% (NSA) of respondents reported price gains while 8.0% reported price declines.
In addition, the new export orders index edged up to 62.1 in August. That reading was extremely strong, as it was only surpassed three times in the past 15 years. The imports index was unchanged at 52.3 in August, which was near the center of its long-running trend. The order backlog series reversed its July jump to 52.1, posting a dismal 41.8 in August. The inventory sentiment index continued its uptrend in August, posting a 61.5 reading. These series are not seasonally adjusted and are not included in the ISM Services PMI total.
The ISM figures are available in Haver’s USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
Peter D'Antonio
AuthorMore in Author Profile »Peter started working for Haver Analytics in 2016. He worked for nearly 30 years as an Economist on Wall Street, most recently as the Head of US Economic Forecasting at Citigroup, where he advised the trading and sales businesses in the Capital Markets. He built an extensive Excel system, which he used to forecast all major high-frequency statistics and a longer-term macroeconomic outlook. Peter also advised key clients, including hedge funds, pension funds, asset managers, Fortune 500 corporations, governments, and central banks, on US economic developments and markets. He wrote over 1,000 articles for Citigroup publications. In recent years, Peter shifted his career focus to teaching. He teaches Economics and Business at the Molloy College School of Business in Rockville Centre, NY. He developed Molloy’s Economics Major and Minor and created many of the courses. Peter has written numerous peer-reviewed journal articles that focus on the accuracy and interpretation of economic data. He has also taught at the NYU Stern School of Business. Peter was awarded the New York Forecasters Club Forecast Prize for most accurate economic forecast in 2007, 2018, and 2020. Peter D’Antonio earned his BA in Economics from Princeton University and his MA and PhD from the University of Pennsylvania, where he specialized in Macroeconomics and Finance.
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