MACRO: US service sector keeps momentum in August

The ISM Services PMI unexpectedly jumped to 56.9 in August from 56.7 in previous month, topping analysts’ estimates of 55.1, and pointing to the strongest growth in services activity in four months. Faster increases were seen for business activity (60.9 vs 59.9) and new orders (61.8 vs 59.9). Also, employment (50.2 vs 49.1) rebounded despite a restricted labor market, while prices rose at a slower pace (71.5, the lowest since January of 2021 vs 72.3).  This indicates that the demand environment is positive despite tightening financial conditions. "Based on comments from Business Survey Committee respondents, there are some supply chain, logistics and cost improvements; however, material shortages remain a challenge”, Anthony Nieves, Chair of the ISM said. 

US ISM Services unexpectedly rose last month and reached their highest level since April. Meanwhile S&P Global's US Services PMI was revised lower to 43.7- that is the lowest since May 2020. Source: Bloomberg via ZeroHedge

Today's ISM reading eased fears that the US economy is heading for a recession and increased the chances of a 75bp interest rate hike by the Fed at the next meeting.