2023-09-06 14:07:00
The Institute for Supply Management’s (ISM) index of nonmanufacturing business conditions hit a six-month high in August. New orders and acceleration in hiring contributed.
Key Point Nonmanufacturing Headline Index rose 1.8 points to 54.5 Median market forecast compiled by Bloomberg was 52.5, above all expectations
The unexpected strength of the ISM index highlights the strength of consumer spending and the economy as a whole. Resilient household spending is helping to boost jobs, fueling optimism that the U.S. can avoid a recession.
Activities expanded in 13 industries, including real estate, rental/leasing, and lodging/restaurant services.
The employment index hit its highest level since November 2021, reaffirming the widespread employment seen in last week’s jobs report. Job growth also allowed companies to proceed with order backlogs.
On the other hand, material costs and wages accelerated in August, and the purchase price index rose to the level for the first time in four months. If service sector costs continue to rise, inflation could become protracted.
New orders hit a six-month high and business sentiment rose slightly. New export orders expanded to the highest level in about a year.
The concern about the current statistics is that the inventory fluctuations and inventory sentiment are too high relative to the business sentiment index.
Inventory sentiment jumped to its highest level since April 2020, signaling the risk of cut orders to manufacturers and service providers in the coming months.
See table for detailed statistics.
Original title:US Service Gauge Rises to Six-Month High, Topping All Forecasts(excerpt)
(Updates to add final three paragraphs)
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