MNI INTERVIEW: ISM Services Poised For Gains Amid Trade Woes

By Alexandra Kelley

     WASHINGTON (MNI) - U.S. non-manufacturing activity continued its long

expansion in August and is poised for more gains even amid global trade

tensions, the chair of the Institute for Supply Management's index told MNI.

     The ISM non-manufacturing index climbed to 56.4 in August from July's 53.7,

the the group reported Thursday. Readings greater than 50 signal an expansion,

which has now reached its 115th consecutive month. 

     This gain is bolstered by new orders, coming in at 60.3, a 6.2 point

increase from July. This was largely driven by seasonal factors such as

back-to-school supplies. By industry the improvement was led by real estate and

accommodation and food services. 

     Today's report is more in line with where the economy is headed than ISM

figures earlier this week showing weakness in manufacturing, said Anthony

Nieves, chair of the ISM's non-manufacturing business survey committee. Nieves

expects 2019 to "finish up nicely" for both non-manufacturing and manufacturing,

though "at an uncertain rate." With non-manufacturing continuing to post solid

gains, Nieves predicts "manufacturing will come back stronger" in September. 

     Another sign of momentum was in the job market, where the ISM employment

index held above 50 even with a 3.1 point decline to 53.1 in August. Respondents

reported they are still adding new workers and are focused on recruiting people

to cope with turnover.

     "The employment index is cyclical, and can lead and lag" Nieves said. 

     The job figures track with the robust consumer spending that has been

crucial to continued economic expansion. Employment opportunities and wage

growth are still on the rise, offsetting the poor business confidence that

hindered the manufacturing sector.

     Conversely, imports decreased 3 points to 50.5 in August from July. Exports

fell from a 53.5 reading in July to 50.5 in August. This tracks with

respondents' growing concerns over geopolitical and trade tensions.

--MNI Washington Bureau; +1 202 371 2121; email: alexandra.kelley@marketnews.com

[TOPICS: MX$$$$]