While it seems everyone is freaking out about slower economic growth in China, growth in the US continues to roll. Although this morning’s headline release of the ISM Non Manufacturing report for the month of August declined from 60.3 down to 59.0, it was still well above consensus expectations of 58.2 and firmly in the area of growth (50+). The charts below show the monthly reading in the ISM Services report as well as a combined ISM reading that takes into account both ISM reports and weights each index according to their representative weight in the economy. As shown, both the ISM Services and the combined ISM indices are right near their expansionary highs, and for that matter near the high end of their range dating back to 1997.
The table below provides a breakdown of the August ISM Services report by each of the report’s sub-indices. As shown, breadth in this month’s report was pretty weak with just three of the index’s ten sub-components showing increases. Of the seven components that fell this month, the biggest declines were in Export Orders (due to strong dollar), Employment, and Prices. While the month/month changes this month were generally weak, on a year/year basis breadth was more positive as six components are up, three are down, and one is unchanged.