US Services Sector Strengthens; ISM Services PMI Rises to 55.4

Activity in the US services sector strengthened in August 2026. The ISM Services PMI rose to 55.4 from 54.1 in July, surpassing market expectations of 54.3.

This increase marks the strongest growth in the services sector over the past six months. A reading above 50 indicates that the sector remains in an expansion phase, with momentum stronger than in the previous month.

The business activity component rose to 61.7 from 59.1, while new orders increased to 60.9 from 57.2. Inventories also grew at a faster pace, rising to 56.7 from 51.4, signaling that demand and operational activity remain solid.

The backlog of orders also increased to 55.6 from 50.9. Some respondents attributed the rising backlog to low staffing levels, which slowed the pace of order fulfillment.

However, labor data remains a weak point. The employment component stayed in contraction territory for the second consecutive month, despite a slight rise to 47.8 from 47.4. Meanwhile, price pressures intensified, rising to 72.6 from 70.3, driven largely by higher prices for oil-related products, diesel, and gasoline.

Newsmaker Analysis: The stronger-than-expected ISM Services data suggests the US economy remains resilient, particularly regarding business activity and new orders. However, the contraction in employment and rising price pressures present a mixed picture for the market. For the Federal Reserve, rising prices in the services sector could reinforce the case for a hawkish stance, while weak employment figures might signal a labor market slowdown. Consequently, the US dollar and yields could find support if the market focuses on inflation, whereas gold might face downward pressure ahead of the Non-Farm Payrolls (NFP) data. (asd)

Source: Newsmaker.id