A report released by the Institute for Supply Management on Thursday showed a much bigger than expected acceleration in the pace of growth in U.S. service sector activity in the month of August.
The ISM said its non-manufacturing index jumped to 58.5 in August from 55.7 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 56.8.
“There was a strong rebound for the non-manufacturing sector in August after growth ‘cooled off’ in July,” said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.
“Logistics, tariffs and employment resources continue to have an impact on many of the respective industries,” he added. “Overall, the respondents remain positive about business conditions and the economy.”
The bigger than expected increase by the headline index came as the business activity index spiked to 60.7 in August from 56.5 in July and the new orders index surged up to 60.4 from 57.0.
The employment index also edged up to 56.7 in August from 56.1 in July, indicating a modest acceleration in the pace of job growth in the service sector.
Meanwhile, the report said the prices index slipped to 62.8 in August from 63.4 in July, suggesting a modest slowdown in the price of price growth.
The ISM released a separate report on Tuesday showing activity in the manufacturing sector unexpectedly grew at a faster rate in August
The purchasing managers index climbed to 61.3 in August from 58.1 in July, while economists had expected the index to dip to 57.7.