U.S. services sector expands faster in August despite continued supply challenge

The U.S. services sector posted faster growth in August than the previous month despite continued supply challenge, the Institute for Supply Management (ISM) reported Tuesday.

The Services Purchasing Managers' Index (PMI) registered 56.9 percent, 0.2 percentage point higher than July reading, according to the latest Services ISM Report on Business.

Any reading above 50 percent indicates the services sector is generally expanding.

Noting that service-sector activity expanded at the fastest pace in four months, Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, said in an analysis that the underlying details point to services "resilience" with business activity and new orders notching their highest reading this year.

The Business Activity Index registered 60.9 percent, 1 percentage point higher compared to the reading in July. The New Orders Index figure of 61.8 percent is 1.9 percentage points higher than the July reading, the ISM report showed.

"Supply challenges are easing, but hiring remains a challenge for employers," said Quinlan and Seery.

The Supplier Deliveries Index registered 54.5 percent, 3.3 percentage points lower than reported in July, indicating faster deliveries and improved supply chain situation.

Employment Index, meanwhile, registered 50.2 percent in August, 1.1 percentage points higher than the reading of 49.1 in previous month.

"Lingering concerns about inflation and price increases. Still having difficulties hiring staff to fill many positions," said a business executive from the public administration industry.

The prices index decreased for the fourth consecutive month in August, down 0.8 percentage point to 71.5 percent, the ISM report showed.