Services sector expands in August but more slowly than July; index points to contraction in employment


Economic activity in the US services industry expanded in August but at a slower pace than in July, according to the Services PMI released today by the Institute for Supply Management. The report is based on data from supply executives in service industries.

The Services PMI slipped to a reading of 56.9% in August from 58.1% in July. However, readings above 50% still indicate expansion.

In addition, readings above 48.5%, over time, generally indicate expansion in the overall economy.

The Services PMI is a composite index based on diffusion indexes of four indicators: business activity, new orders, employment and supplier deliveries. All are seasonally adjusted except for supplier deliveries.

The employment index rose to a reading of 47.9% in August. That is better than July’s reading of 42.1% but still indicates contraction.