ISM Services: The Fire Isn’t Out

Source: Economics Group of Wells Fargo Bank, N.A. Summary The fastest pace of rate hikes in a generation temporarily slowed activity in the service sector, but the ISM Services Index rose to a six-month high in August as the prices-paid measure climbed for the second-straight month. Word on the Street is Fire in Your Heart is Out The fastest pace of rate hikes in a generation has yet to fully quell activity in the service sector. The ISM Service Index rose in August to 54.5, expanding at the fastest pace since the 55.1 reading in February (chart). Gains were broadly based; new orders, employment, prices, and production ALL expanded at a faster pace in August. Order backlogs slipped into contraction territory, but that was the only item with a minus sign in the “percent point change” column. Import orders were unchanged and everything else posted an increase in August. This is in stark contrast to what is happening in the factory sector. Last week we learned the Manufacturing ISM came in below 50 yet again, bringing the total number of months in contraction territory to ten, a run never before seen outside a recession. An argument could be made that manufacturing has been in recession most of this year, particularly in some harder hit sectors. READ FULL ARTICLE >>