A report released by the Institute for Supply Management on Friday showed U.S. service sector growth slowed from a record pace in the month of August.
The ISM said its services PMI fell to 61.7 in August after reaching an all-time high of 64.1 in July, although a reading above 50 still indicates growth in the sector. Economists had expected the index to drop to 61.5.
“There was a pullback in the rate of expansion in the month of August; however, growth remains strong for the services sector,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee.
He added, “The tight labor market, materials shortages, inflation and logistics issues continue to cause capacity constraints.”
The pullback by the headline index reflected a notable slowdown in the pace of growth in business activity, as the business activity index slid to 60.1 in August from 67.0 in July.
The new orders index also slipped to 63.2 in August from 63.7 in July, while the employment index edged down to 53.7 from 53.8.
The Labor Department’s closely watched monthly jobs report released earlier in the day showed employment in the service-providing sector rose by 203,000 jobs in August after jumping by 734,000 jobs in July.
The ISM report also showed the prices index slumped to 75.4 in August from 82.3 in July, indicating a slowdown in the pace of price growth.
On Wednesday, the ISM released a separate report showing manufacturing activity in the U.S. unexpectedly grew at a slightly faster rate in the month of August.
The ISM said its manufacturing PMI inched up to 59.9 in August from 59.5 in July. The uptick surprised economists, who had expected the index to dip to 58.6.