Chart of the Week: Service Sector Sails Along

Chart of the Week: Service Sector Sails Along

The folks who run service businesses around the U.S. aren’t buying the recession story. Instead, according to surveys conducted by the Institute for Supply Management (ISM), they’re saying the economy continues to expand.

Every month, the ISM surveys over 300 purchasing managers and executives from 60-plus industries to get a read on the health of the service sector. This includes everything from restaurants and wealth advisers to health care providers and hotels—in all, more than 70% of our economy.

This week, the ISM service sector survey surprised to the upside, showing economic activity expanded in August for the second month in a row.

A leading indicator of future business is the new orders component of the ISM services survey, which I’ve charted. After declining at the start of the year and bouncing around throughout the spring, new orders picked up in July and hit a 2022 high in August. This influx of new business demand shows that a major portion of the U.S. economy has wind in its sails heading into the fall.

Note: Chart shows monthly level of the ISM Services New Orders index from September 2017 through August 2022. Sources: Institute for Supply Management, FactSet.

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