US service sector activity rose to a six-month high in August, bolstered by a pickup in new orders and hiring.

The Institute for Supply Management's services index increased almost 2 points to 54.5, data showed Wednesday. Readings above 50 indicate expansion, and the figure topped all estimates in a Bloomberg survey of economists.

The surprisingly robust figures highlight the enduring strength of consumer demand and the broader economy. The durability of household spending has supported additional hiring as well as bolstered hopes the US can avert a recession.

The ISM's employment index rose last month to its highest level since November 2021, re-enforcing the broad-based hiring seen in last week's jobs report. Additional hiring also allowed firms to make progress on backlogged orders.

Meanwhile, costs for materials and wages continued to accelerate in August, with the group's prices-paid index rising to a four-month high. A sustained pickup in costs for service providers would risk keeping inflation elevated for longer.

ISM's gauge of new orders rose to a six-month high and a measure of business activity edged higher. Exports expanded at the fastest pace in nearly a year.

One concerning detail in the figures was a build in both inventories and in views that those stockpiles are currently too elevated relative to business activity.

The group's inventory sentiment measure jumped to the highest since April 2020, which risks a cutback in orders placed with manufacturers or other service providers in coming months.

Source : Bloomberg