US services sector roars into August with strongest PMI beat in months

The US services sector came in hotter than expected in August, with the ISM Non-Manufacturing PMI landing at 55.4, well above the consensus estimate of 54.1 and the July reading of 54.1. Any number above 50 signals expansion, so 55.4 is not just growth. It is growth with conviction. The report, released September 3, marks the 92nd consecutive month of expansion for the non-manufacturing sector. That is more than seven and a half years of uninterrupted growth. What the numbers actually say Business activity and production rose to 57.5, a gain of 1.6 points from July. New orders climbed to 57.1, up 2.0 points. Employment expanded to 56.2, a 2.6-point jump. Of the 18 industries the ISM tracks, 15 reported expansion in August. Only 2 reported contraction. Retail Trade, Information, and Finance and Insurance led the expansion. The August reading sits just 0.9 points below the 12-month average of 56.2, meaning this month was not an anomaly spiking above trend. It was a return toward the mean after July came in slightly softer. Federal Reserve implications and market context The employment sub-index jumping 2.6 points to 56.2 suggests services businesses are not just retaining staff. They...