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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.

Related Posts

September 3: ISM Manufacturing Index Little Slightly Better But New Orders and Production Contracting Faster

September 3: Construction Spending Growth Slows in May, Stops in June, Negative in July

September 5: Fed Beige Book Shows Flat or Declining Economy in 9 of 12 Fed Districts

For those of you who think the economy is not in recession, will 12 of 12 Fed districts in contraction do it?

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