US service sector business activity continues expanding in August

NEW YORK: According to a report by financial services firm S&P Global, business activity in the US service sector grew in August.

“US business activity growth remained robust in August,” according to the report released Thursday, with the service sector expanding steadily and rapidly.

The S&P Global US Services PMI Business Activity Index rose to 55.2 in August, above the market expectation of 54.0 and following a reading of 55.0 in July. A reading above 50 indicates growth, while a reading below 50 indicates contraction.

According to Chris Williamson, chief business economist at S&P Global Market Intelligence, the strong growth rate in August points to robust GDP growth of more than 2% annualized in the third quarter, which should help alleviate near-term recession concerns.

“Growth has become increasingly dependent on the service sector as manufacturing, which often leads the economic cycle, has declined,” he explained.

However, Williamson noted that service sector growth is constrained by hiring difficulties, “which continue to push up pay rates and mean overall input cost inflation remains elevated by historical standards.”