U.S. Service Activity Remains Robust: 3 Fund Picks

Per the latest report from the Institute of Supply Management (ISM), service activity for the month of August surged for the 103rd month on the trot. Steady growth in 16 out of the 18 key non-manufacturing industries boosted service sector activity last month.

Steadiness in the metric, which tracks the performance of service-focused companies in America, points toward a strengthening economy. Hospitals and healthcare service providers, retailers as well as restaurants exhibited growth last month. Under such circumstances, investing in mutual funds having significant exposure to services-related companies may prove prudent.

A Burgeoning Service Sector in the United States

The Institute of Supply Management reported on Sep 6 that non-manufacturing activity for August came in at 58.5%, surpassing the consensus estimate of 56.3% and the previous month’s figure of 55.7%. A reading above 50 indicates expansion in the sector. And a reading above 55% is considered phenomenal.

Firms across America complained that trade war woes and threats pertaining to the imposition of newer tariffs have actually pushed up prices of raw materials. The paucity of skilled labor was pointed out as another hindrance to development. However, a flourishing domestic economy and robust demand more than made up for such adversities.

A Spur in Business Activity and New Orders

Non-manufacturing inventories index increased 53.5% in August. This marked the seventh consecutive month of increase. Moreover, the Business Activity Index registered growth of 60.7% in August to report growth in business activity for the 109th consecutive month. Notably, of the 15 industries surveyed, 14 reported an increase in business activity for the month.

Looking at the other positive developments from the report, the non-manufacturing New Orders Index surged to 60.4%. This represents an advancement for 91 straight months that too at an accelerated rate when compared with July. Finally, the non-manufacturing Employment Index surged to 56.7%, expanding for the 54th straight month.