The vast US service sector activities were slumped last month, while ADP National Employment report released later this week had underscored a modestly resilient US Labour market. In the matter of the fact, other economic data released on Wednesday had unveiled that US trade deficit narrowed down to its lowest level in more than a year in August.
According to data from the Institute of Supply Management (ISM), the ISM’s index for US national services sector PMI (Purchasing Managers’ Index) dropped to 56.7 compared to a reading of 56.9 logged a month earlier.
Nonetheless, the figure came in above analysts’ expectations, as an analysts’ poll had forecasted that US national services sector PMI might fall to 56.0.
US labour market appears resilient, services sector PMI falls
Meanwhile, laying the blames of a slowdown in US service sector PMI to US Fed’s ultra-hawkish monetary policy, a senior economist at FHN Financial in New York, Will Compernolle said, “Rate hikes are meant to slow the economy and labor demand enough to fight inflation.
The services side of the economy appears too resilient to suggest the kind of slowdown the Federal Reserve wants”. On top of that, with job openings dipped over 1.1 million as cited by the US Labour Department’s closely monitored JOLTS data, the steepest decline in job openings since 2020, layoffs appeared to have come into play.
Still, US labour market remains relatively strong with 10.1 million openings as of the last day of August. Supporting a resilient US labour market, ISM’s service industry employment report had underscored that its index for employment jumped to 53.0 compared to a reading of 52.0 reported a month earlier.