The services sector improved in August for the 44th consecutive month, according to the Institute for Supply Management's Report on Business, which was released today.
The Institute's Non-Manufacturing Index registered an overall 58.6% rating, a 2.6 point increase from July's 56% reading. An above-50 index denotes positive change from the previous month, and August's improvement equates to increasingly fast growth in the services sector. Analysts were pleasantly surprised, having expected a slowdown to 55%.
The index is comprised of four main components. Business activity increased 1.8 points, to 62.2%, new orders added 2.8 points, to hit 60.5%, employment jumped 3.8 points, to 57%, and prices paid for purchased materials and services fell 6.7 points, to 53.4%.
All of these components point to strong gains for the services sector. Business activity serves as a sign of present conditions, new orders give a nod to future profits, employment alludes to confident employers, and prices give businesses a bit more wiggle room.
Sixteen of 18 reporting services industries registered growth in August, led by education and management/support services. Mining, and arts, entertainment, and recreation, reported contractions.