The U.S. service sector either contracted for the second straight month or expanded at the fastest pace since April.
It all depends on which survey you read.
The S&P Global U.S. Services Purchasing Managers Index (PMI) fell to 43.7 in August from 47.3 in July, below the preliminary “flash” reading of 44.1. This is the lowest level since May 2020, when much of the services sector was locked down.
The Institute for Supply Management said its barometer of the service sector rose to to 56.9 percent in August from 56.7 percent in July. This is the fourth consecutive month of expansion, according to ISM. The ISM Business Activity Index registered 60.9 percent, an increase of 1 percentage point from July. The New Orders Index figure rose 1.9 percentage points to 61.8 percent.
So which is correct? Only time will tell which reading of the economy’s service sector is pointing in the right direction.
“August saw the U.S. economy slide into a steepening downturn, underscoring the rising risk of a deepening recession as households and business grapple with the rising cost of living and tightening financial conditions,” said Chris Williamson, chief business economist at S&P Global.
“Growth continues — at a slightly faster rate — for the services sector, which has expanded for all but two of the last 151 months. The services sector had a slight uptick in growth for the month of August due to increases in business activity, new orders and employment. Based on comments from Business Survey Committee respondents, there are some supply chain, logistics and cost improvements; however, material shortages remain a challenge,” said ISM’s Anthony Nieves.