US services activity in August expands at fastest pace in six months

Activity at US service providers expanded in August at the fastest pace in six months on the sharpest acceleration in orders in nearly a year.

The Institute for Supply Management's index of services rose 1.9 points last month to 52, the group said Thursday. Readings above 50 indicate expansion, and the figure topped all but one estimate in a survey of economists.

The new orders index jumped 5.7 points, the most since September, to 56. The business activity index, which parallels the ISM's factory output gauge, climbed to a five-month high of 55. The solid advance in those demand indicators suggests the largest part of the economy is gaining some traction after five straight months of sluggishness. At the same time, a measure of materials costs showed service providers continue to battle a stiff inflationary headwind. The August reading of 69.2 was the second-highest since late 2022. "Commentary was led by respondents' increasing citations of tariff impacts, with some indication that business activity and imports are being driven by an attempt to get ahead of additional price increases," Steve Miller, chair of the ISM Services Business Survey Committee, said in a statement.