U.S. Service-Industries Rebound Underpins Third-Quarter Growth

The expansion in service industries in August indicates the biggest part of the U.S. economy regained its footing after a soft month, a survey from the Institute for Supply Management showed Wednesday.

Highlights of ISM Non-Manufacturing (August)

  • Index rose to 55.3 (est. 55.6) from 11-month low of 53.9 in July; readings above 50 indicate growth
  • Measure of new orders advanced to 57.1 from 55.1
  • Employment gauge climbed to 56.2 from 53.6 

Key Takeaways

While the main gauge was slightly below its average for this year, the results show the abrupt slowdown in July was temporary, and underscore sustained demand for services that account for about 90 percent of the economy and span industries such as utilities, retailing, health care, and construction.

The outlook remains one of modest but steady economic growth backed by a resilient job market, healthier household finances and low borrowing costs.

The services data from Tempe, Arizona-based ISM also are consistent with a pickup at factories. The group’s manufacturing index, released last week, surged to the highest level since 2011.

Other Details

  • Index of business activity, which parallels the ISM’s factory production index, increased to 57.5 from 55.9
  • Gauge of order backlogs rose to 53.5 from 52; export orders measure advanced to 55 from 53
  • Prices-paid index rose to 57.9 from 55.7
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