Sep 7, 2023 - Economy & Business

U.S. services economy is still in growth mode

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

The services side of the U.S. economy continues to look solid.

Why it matters: Services account for roughly 75% of the U.S. economy, employing 4 out of every 5 workers.

The latest: A real-time survey on the health of the U.S. services sector for August arrived better than expected on Wednesday.

  • The ISM services index registered 54.5 for the month; analysts had expected a slightly softer 52.4.

How it works: ISM index readings above 50 indicate growth or economic expansion. Readings below 50 signal contraction.

Yes, but: A separate reading on the manufacturing sector was below 50 again, marking the 10th straight month of industrial contraction.

  • Manufacturers have been whipsawed as the COVID-era boom in demand for manufactured goods from consumers quickly shifted to demand for activities and services — movies, restaurants, vacations, etc. — as the pandemic ebbed.

The bottom line: The engine of the American economy, services, is still purring.

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