U.S. ISM Services PMI Continues to Rise in August
Summary
- 51.5 in August vs. 51.4 in July, higher than expected; 0.2 pts. below the 12-month avg. of 51.7.
- Business Activity (53.3, the 50th expansion in 51 mths.), New Orders (53.0, the 49th expansion in 51 mths.), Employment (50.2, the second straight expansion), and Supplier Deliveries (49.6 vs. 47.6).
- Prices Index rises 0.3 pts. to 57.3, remaining above 50 since June ’17.
The U.S. ISM Services PMI edged up to 51.5 in August after rising to 51.4 in July and falling to a contraction-level 48.8 in June (lowest since May ’20), according to today’s report by the Institute for Supply Management, indicating expansion in the services sector in six of eight months in 2024 and for the 48th time in 51 months. The August index was slightly up from a low of 49.0 in December 2022 but below 54.1 in August 2023 and a record-high 67.1 in November 2021. The 12-month average was 51.7, reflecting relatively strong growth in the U.S. services sector. The Action Economics Forecast Survey had expected 51.0 for August.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading. This index rose to 51.0 in August from 50.8 in July, showing expansion for third time in four months. The latest figure was higher than a four-year-low 48.8 in June and a low of 48.9 in December 2022 but lower than 53.3 in August 2023 and a record-high 66.3 in November 2021. These series date back to July 1997.
In the latest services survey, the business activity index declined to 53.3 in August after rising to 54.5 in July, indicating business activity expanded for the 50th time in 51 months. The index was up from its recent low of 49.6 in June and a low of 52.7 in December 2022 but down from a record-high 69.5 in November 2021. A 22.6% of respondents (NSA) reported higher activity in August while a lessened 12.5% reported an activity decline. The new orders index increased to 53.0 in August from 52.4 in July, indicating expansion in new orders for the 49th time in 51 months at a slightly faster pace. The index was up from its recent low of 47.3 in June and a low of 45.0 in December 2022 but down from a record-high 69.5 in October 2021. An increased 23.5% of respondents (NSA) reported higher orders in August while a lessened 14.0% reported a decline. Meanwhile, the supplier deliveries index (NSA) increased to 49.6 in August after falling to 47.6 in July, indicating faster supplier delivery performance for the second successive month after two months in slower territory.
On the labor front, the employment index fell to 50.2 in August after a 5.0-point rise to 51.1 in July, showing employment activity in the services sector expanded for the second straight month after five consecutive months of contraction. The latest reading was above a low of 43.8 in December 2023 but below a high of 58.3 in April 2021. A 14.3% of respondents (NSA) indicated higher employment in August while an increased 14.5% reported a decline.
On the inflation front, the prices index rose to 57.3 in August from 57.0 in July, indicating prices paid by services organizations for materials and services had risen (i.e., above 50) since June 2017 and at a slightly faster pace. The index, while up versus its recent low of 53.4 in March and a low of 54.8 in June 2023, remained below a high of 64.0 in January this year and a record-high 83.8 in March 2022. Nearly nineteen percent of respondents (NSA) reported price rises in August while a lessened 6.7% reported price declines.
Additionally, the new export orders index fell to 50.9 in August after a 6.8-point rise to 58.5 in July, indicating new export orders expanded for the ninth time in 10 months but at a slower rate. The imports index declined to 50.3 in August from 53.3 in July, registering the second straight month of expansion after contracting in June and May. The inventories index rose to 52.9 in August after increasing to 49.8 in July, indicating inventories expanded for the first time since May following April’s expansion and four consecutive months of contraction. The inventory sentiment index fell to 54.9 in August from 63.2 in July, showing continued expansion since May 2023 but at a slower rate. The backlog of orders index dropped to 43.7 in August after rising to 50.6 in July, posting the second contraction in three months. These series are not seasonally adjusted and not included in the ISM Services PMI total.
The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes (25% each): Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector; below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries. 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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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