US SERVICE SECTOR ACTIVITY HITS HIGHEST LEVEL IN NEARLY A DECADE

The Institute for Supply Management said its non-manufacturing survey climbed to 59.6 from 58.7 in August and besting expectations for 57.7. It’s the highest reading since August 2005.

The employment component hit its highest level since February 2006, which bodes well for Friday’s non-farm payroll report.

Every single component of the survey is now growing:

And here’s their sampling of anecdotes describing the state of the services industry:

Meanwhile, Markit Economics’ survey hit 59.5, in August, better than an earlier reading of 58.5 but below July’s 60.8 reading.

The composite reading of 59.7 was the lowest in three months.

Still, payrolls increased, as did input costs. Markit senior economist Tim Moore sees solid ahead growth for Q3.

“US service providers enjoyed a bumper summer, with companies reporting continued upbeat trading

conditions in August,” he writes. “Alongside the booming manufacturing economy, the surge in service sector growth puts the economy on course to grow by around 4% on an annualised basis in the third quarter, similar to the expansion seen in the second quarter.”

Here’s the new chart for the composite reading, which shows services and manufacturing PMI against GDP:

Earlier we learned ADP payrolls unexpectedly fell to 204,000 from 212,000 in August, and that jobless claims climbed to 302,000 from 298,000, and unit labour costs unexpectedly fell 0.1% in Q2 after rising 0.6% in Q1.

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