The U.S. non-manufacturing sector grew at a faster pace in August after two consecutive months of cooling off, new survey data from the Institute for Supply Management showed.
The ISM's seasonally adjusted non-manufacturing index rose to 56.4% in August, 2.7 percentage points higher than the 53.7% reading in the previous month. A reading above 50% indicates expansion.
August's reading beats the 54.0% consensus estimate of economists polled by Econoday.
"The respondents remain concerned about tariffs and geopolitical uncertainty; however, they are mostly positive about business conditions," said Anthony Nieves, chair of the ISM non-manufacturing business survey committee.
The business activity or production index rose to 61.5% from 53.1% in July, while the new orders index grew to 60.3% in August from 54.1% the previous month. The inventory index registered 55%, up from 50.0% in July.
Indexes for employment, new export orders and imports also grew month over month but at a slower clip.
ISM survey data showed the price index rising at a faster pace in August to 58.2% from 56.5% in July. Backlog of orders contracted to 49.0% from 53.5% the previous month, while supplier deliveries fell to 50.5% from 51.5% previously.
IHS Markit, for its part, pointed to the slowest increase in new business since March 2016, citing data from its U.S. services PMI survey.
The research firm's services business activity index fell to 50.7 in August, down from 53.0 in July. Economists polled by Econoday expected a reading of 50.9.
The U.S. composite PMI output index, the weighted average of manufacturing and services business activity, dipped to 50.7 in August from 52.6 previously. This is marginally lower than the 50.9 Econoday consensus reading.
IHS Markit Chief Business Economist Chris Williamson noted that August has been one of the toughest months for U.S. businesses since the global financial crisis, adding that "this time, trade wars and falling exports appear to be the main drivers of weakness, exacerbating fears of a broader economic slowdown both at home and globally."
