US service sector steady in August; employment cooling
10:04 am Thursday, September 05th, 2024
WASHINGTON (Reuters) – U.S. services sector activity was steady in August, but employment gains slowed, consistent with an easing labor market.
The Institute for Supply Management (ISM) said on Thursday that its nonmanufacturing purchasing managers (PMI) index was little changed at 51.5 last month compared to 51.4 in July.
A PMI reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the economy. The ISM views readings above 49 over time as generally indicating an expansion of the overall economy.
Economists polled by Reuters had forecast the services PMI dipping to 51.1. The report added to solid consumer spending in July in suggesting that the economy continued to expand, though at a moderate pace relative to last year.
A jump in the unemployment rate to a near three-year high of 4.3% in July sparked fears of a recession and put a 50-basis points interest rate cut on the table this month when the Federal Reserve is expected to start its easing cycle.
The ISM survey’s new orders measure increased to 53.0 from 52.4 in July. Its measure of services employment fell to 50.2 from 51.1 in July.
The labor market is slowing, but hardly deteriorating. Government data on Wednesday showed there were 1.07 job openings for every unemployed person in July, down from 1.16 in June.
Job growth is expected to have picked up in August, according to a Reuters survey, which forecast nonfarm payrolls increasing 160,000 last month after rising 114,000 in July. The unemployment rate is forecast slipping to 4.2%.
Services inflation was little changed last month. The ISM’s prices paid measure for services inputs edged up to 57.3 from 57.0 in July. Price pressures in the economy are subsiding as higher borrowing costs curb demand.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
