US services activity picked up in August, with ISM Services PMI rising to 52.0 from 50.1, comfortably above expectations of 50.9. The headline gain was supported by stronger demand conditions, highlighting resilience in the sector despite lingering economic uncertainty. ISM noted the reading corresponds to a 1.1% annualized rise in GDP.
Details showed business activity rising to 55.0 from 52.6, while new orders jumped sharply to 56.0 from 50.3, marking the strongest pace since early this year. The improvement highlighted a rebound in demand momentum as companies prepared for the holiday season, with some firms reportedly advancing purchases to get ahead of tariff-related price increases.
The employment index, however, remained in contraction at 46.5, signaling persistent softness in hiring within the services sector. Meanwhile, the backlog of orders fell to a 16-year low, tempering optimism about the durability of demand. Prices stayed elevated at 69.2, marking a ninth consecutive month above 60—a sign of ongoing cost pressures across the industry.
ISM said commentary from respondents was dominated by tariff concerns, with firms highlighting both higher input costs and evidence of import demand being pulled forward.
