The U.S. services sector expanded at a modest pace in August 2024, with the Institute for Supply Management (ISM) reporting an index of services at 51.5, indicating growth, albeit slower than previous months. This follows a contraction observed in June, where the services PMI fell to 48.8 percent, marking the second contraction in three months [919fcb80] [26e64322]. The employment index for August slipped to 50.2, suggesting stagnation in job growth, while order backlogs dropped nearly seven points, the largest decline since April 2020 [26e64322].
In a related report, the National Federation of Independent Business (NFIB) revealed that 40% of small business owners reported unfilled job openings in August 2024, with labor quality identified as the top problem, rising to 21% [4cc7811c]. The NFIB noted that 62% of small business owners are hiring or trying to hire, yet 56% reported having few or no qualified applicants available [4cc7811c]. This reflects ongoing challenges in the labor market, as job openings remain highest in sectors such as transportation, construction, and manufacturing [4cc7811c].
Despite the modest expansion in the services sector, the ISM survey indicates a mixed economic landscape. Ten industries reported growth, led by entertainment and recreation, while seven sectors, including retail and construction, saw decreases [26e64322]. Job openings have fallen to their lowest levels since early 2021, and layoffs increased in July, reflecting ongoing challenges in the labor market [26e64322]. In July, the unemployment rate stood at 4.3%, and job creation was overstated by 818,000 workers over the past year [4cc7811c].
The Project Stress Index (PSI) also reflects the current economic climate, with a reading of 112.7 in June, up 9% from the previous year. Project abandonments increased significantly, particularly in the private sector, while public sector projects showed a smaller increase [62613edf]. The PSI's lowest point since its last surge in September 2023 indicates ongoing stress in project management and execution across various sectors [62613edf].
Overall, while the services sector showed signs of modest growth in August, the broader economic indicators suggest that challenges remain, particularly in employment and demand. Policymakers and businesses will need to navigate these complexities as they assess the trajectory of economic recovery [919fcb80] [26e64322].