ISM Services Index Up Slightly But Employment Weakens To Nearly Flat
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The ISM services index was essentially unchanged but production and employment weakened with new orders rising.
ISM chart and excerpts below by permission from the Institute for Supply Management® ISM®
Please consider the August 2024 ISM® Services Report On Business® emphasis mine.
Economic activity in the services sector expanded for the second consecutive month in August, say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 51.5 percent, indicating sector expansion in six of eight months in 2024. This month’s reading indicates sector expansion for the 48th time in 51 months.
Respondent Comments
- “Generally, business is good. However, there are concerns of slowing foot traffic at restaurants and other venues where our products are sold.” [Agriculture, Forestry, Fishing & Hunting]
- “Housing market continues to be dampened by higher borrowing costs. All segments of the industry are affected. Single-family homes for sale, build for rent, and multifamily units are all feeling the effects.” [Construction]
- “Activity is increasing.” [Finance & Insurance]
- “Business continues to be strong.” [Health Care & Social Assistance]
- “Overall business is improving.” [Information]
- “Hiring of employees, contractors and consultants continues to decline as companies look to control costs during a period of economic and political uncertainty. Employee layoffs continue across a broad range of companies and industries.” [Management of Companies & Support Services]
- “Business has slowed, and it is harder than ever to find talent, but less jobs available as well.” [Professional, Scientific & Technical Services]
- “Up in business and activity.” [Transportation & Warehousing]
- “Steady interest rates are impacting investment in nonregulated business silos.” [Utilities]
- “High food costs are impacting customer demand, and weak sales performance has resulted in negative growth overall. Business activity is stable, and supplier costs are generally flat.” [Wholesale Trade]
Mixed Bag
It’s no surprise that Health Care and Social Assistance is strong given the demographics of aging baby boomers and a huge influx of immigration. This has fueled a hiring surge in this sector.
I doubt transportation and warehousing is doing well on average. But one respondent thinks so. This is likely region-dependent.
Two negative comments related to restaurant traffic and one negative comment was on construction. Both are easily understandable weaknesses.
If insurance is strong, I suspect the reason is people shopping around looking for better rates.
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