In yet one more example of positive economic news out today, the Institute for Supply Management (ISM), the Tempe, Arizona-based trade group has just reported that the non-manufacturing sector increased its strength during August, coming in with a reading of 53.7 for the month. That was the 32nd straight month in which the services sector, which accounts for some two-thirds of aggregate U.S. business activity, had seen an expansion in activity.
This report topped the July figure of 52.6, expectations for a flattish reading of 52.5 for the month, and a dour report from the ISM issued Tuesday morning on manufacturing activity. That picture of the industrial arena had been much more sobering, with the measure of industrial output coming in marginally below the 50.0 dividing line between an expansion and a contraction in this area. Manufacturing has now declined for three months in a row. As noted, non-manufacturing has grown for 32 months running.
Within the aggregate survey on non-manufacturing, we are seeing increases in new orders, employment, supplier deliveries, prices, and a big jump in backlogs. Only imports are contracting. Leading the way forward last month were agriculture, forestry, fishing, and finance & insurance.
As to the purchasing managers interviewed for this survey, we saw comments suggesting that markets and customers are both remaining strong, although overall conditions continue to be unpredictable. In general, this was a supportive report, and would seem more in line with the moderate improvement taking hold within the broad economy across the country, rather than the weaker manufacturing metrics supplied earlier this week. This report follows some favorable data on the employment outlook in our country issued earlier today and precedes, by a day, the critical Labor Department report on employment and unemployment due out tomorrow morning at 8:30 AM (EDT).