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US nonmanufacturing activity expands at faster rate, but employment pace slows

September 05, 2019

Economic activity in the US nonmanufacturing sector expanded in August at a faster pace than in July, according to the Institute for Supply Management’s nonmanufacturing index, released today. ISM’s nonmanufacturing index rose in August to a reading of 56.4 from July’s reading of 53.7, representing continued growth in the nonmanufacturing sector at a faster rate.

Economists polled by Reuters had forecast the index would rise to 54.0 in August. The Institute for Supply Management noted businesses “remain concerned about tariffs and geopolitical uncertainty,” but also noted “they are mostly positive about business conditions.”

However, the employment portion of the index fell to a reading of 53.1 in August, down 3.1 percentage points from 56.2 in June.

Ten industries reported increased employment, and six industries reported decreased employment. Comments from respondents include: “New jobs added to compensate for the growth of business” and “Turnover. We are working on recruiting individuals.”

Separately, the US four-week moving average of initial claims for unemployment insurance rose to 216,250 last week, up 1,500 from the previous week’s average, according to seasonally adjusted numbers released today by the US Department of Labor. The previous week’s average was revised slightly upward by 250.

The four-week moving average decreases the volatility of the weekly numbers. Total initial claims for unemployment insurance for the week ended Aug. 31 rose to 217,000, up 1,000 from the previous week’s level which was revised upwards by 1,000.

MarketWatch reported there was no sign of rising or widespread layoffs even as the US economy confronted more obstacles to growth.

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