US services PMI reaches new record high in August: ISM
The US service economy accelerated at a faster pace in August, as the national services activity gauge rose to its highest level on record.
The Institute for Supply Management’s gauge of national service activity rose to 59.6 from 58.7, the highest level since the survey’s inception in January 2008. A median estimate of market analysts called for a decrease to 57.5.
The US service economy has been above the 50 mark that separates expansion from contraction for 55 consecutive months. August marked the second consecutive month national service activity had reached a new record high.
Fifteen non-manufacturing industries expanded last month, led once again by the construction sector. Retail trade and management of companies and support services also registered strong gains. The two industries reporting decline were arts, entertainment and recreation, and mining.
Overall business activity surged in August, as 14 service industries reported growth. The gains were led by retail trade, management of companies and support services, and wholesale trade.
New orders increased sharply in August, albeit at a slower pace than the previous month. The gains were led by management of companies and support services, professional services, and wholesale trade.
New export orders increased in August, but at a slower pace than the previous month. Four service industries reported increases in this segment, led by professional services, transportation and warehousing, and retail trade.
“General business conditions have improved,” said one respondent from the information industry.
“Business is holding steady with orders increasing slightly. The rest of 2014 should show some slight growth. International orders have been slow to match U.S. growth but appear to be increasing slightly as well,” said another respondent from professional services.
“The local economy continues to get stronger,” according to a respondent from public administration.
In a separate release Markit Group said the US service economy remained strong in August, as increased business activity supported another strong month of payroll gains. Markit’s seasonally adjusted gauge of US service activity eased to 59.5 from 60.8.
Strong service activity in July and August suggests the US economy remained elevated in the third quarter, building off a solid second quarter that saw gross domestic product expand 4.2 percent annually.
Service industries account for more than two-thirds of US GDP.
According to Markit Group chief economist Chris Williamson, strong contributions from manufacturing and services suggest the US economy is on course to grow around 4 percent annually in the third quarter.
Twelve services industries reported increased employment activity in August, ISM data showed, as the employment sub-index increased for the sixth straight month. Gains were led by other services, transportation and warehousing, and educational services.
The service economy was responsible for 80 percent of all new hires in August, the ADP Institute reported today. US service providers added 164,000 private payrolls last month, down from 190,000 in July. The professional and business services sector made the largest contribution at 51,000. Employment in trade, transportation and utilities increased 28,000, while financial sector employment increased 5,000.
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