Strong demand boosts US services sector activity in August

US services activity accelerated in August, driven by stronger demand that pushed new orders to a 3-1/2-year high and lifted input prices—signals that inflation may stay elevated. The Institute for Supply Management’s nonmanufacturing Purchasing Managers’ Index rose to 55.4 from 54.1 in July, above the 50 level that indicates growth. Economists polled by Reuters had expected 54.2. The new orders index surged to 60.9, the highest since February 2023. Supplier deliveries eased to 51.3, while prices paid climbed to 72.6. Markets are pricing roughly a 64% chance the Fed raises its overnight rate before year-end.