The numbers: An ISM barometer of U.S. business conditions at service companies such as restaurants and hotels strengthened to 54.5% in August from 52.7 in the prior month. This is the highest level since February.
Economists polled by the Wall Street Journal had expected the index to slip to 52.5%.
This is the eighth straight reading above the 50% threshold that indicates expansion in the economy.
Key details: The new orders index rose 2.5 percentage points to 57.5% in August. The employment index rose 4 percentage points to 54.7%.
Prices rose 2.1 percentage points to 58.9% in the month.
Thirteen out of 18 industries reported growth in August.
A separate reading on the service sector from S&P Global Market Intelligence reported a slowdown in growth in August.
However, the S&P Global U.S. services PMI fell to 50.5 in August, down sharply from 52.3 in the prior month and the “flash” reading of 51. This is the slowest pace in seven months.
Big picture: “Despite mixed signals from regional Fed and national surveys, the service sector has remained resilient. We expect this trend to continue, however any signs of weakening would be noteworthy since services and consumer spending have been the major drivers of growth lately,” said Aichi Amemiya, chief economist at Nomura.
Market reaction: U.S. stocks
DJIA
SPX
dropped after the ISM data was released and the 10-year Treasury yield
BX:TMUBMUSD10Y
jumped 3 basis points to 4.29%, as Wall Street worried the data as increasing the likelihood of additional Federal Reserve rate hikes.
This story originally appeared on Marketwatch
