Economic activity in the US continued to thrive in August, possibly the last month of survey data before an expected downturn due to the impact on business of Hurricane Harvey.
Across the US, economic activity expanded at a "modest to moderate" pace, according to all 12 of the Federal Reserve districts, as consumer spending increased with gains for non-auto retail sales and tourism.
Furthermore, purchasing managers in the service sectors surveyed by both the US Institute for Supply Management and global survey provider IHS Markit, reported improving economic conditions.
Federal Reserve Beige Book
The Fed's Beige Book report, a summary of economic conditions reported by the 12 Fed districts eight times a year, revealed robust business sentiment, albeit with some slowing in growth.
While labour markets remained tight, there was some slowing in employment growth, but wage pressures appeared to be building with reports of "modest to moderate" growth in average earnings.
Price pressures also rose "modestly" across the country as input and materials costs increased, most notably for freight, lumber and steel.
Special note on Hurricane Harvey
The Beige Book reported "broad disruptions" had been caused to economic activity along the Gulf Coast, although it was too soon to gauge the full impact.
A fifth of oil and natural gas output was closed in the Gulf, while many onshore facilities were also temporarily stopped.
Harvey also affected fuel and petrochemical production forcing the closure of 15 refineries.
Institute of Supply Management index
The ISM survey of purchasing managers in the US services industries showed that business activity grew in August for the 92nd consecutive month.
The non-manufacturing ISM index rose to 55.3 in August, from 53.9 in July, but missed analyst forecasts of a rise to 55.8.
New orders rose at a stronger pace than the previous month, while employment also climbed from July's levels thanks to growth in retail trade, support services, IT and utilities, among others.
Some market watchers were concerned this would be the last month of faster growth before the impact of Hurricane Harvey – and potentially Irma – is measured in the data.
However, said Ian Shepherdson, chief economist at Pantheon Macroeconomics: "The key point for now is that ahead of the storms, the non-manufacturing sector was in good shape".
Markit services PMI
Purchasing managers surveyed by IHS Markit also showed growth in activity in the services sector, with the PMI index rising to 56 in August from July's 54.7 - the fastest upturn since November 2015.
Here too, the employment index showed strong growth at its quickest pace for two years, while new business expanded at rate not seen since July 2015.
Chris Williamson, economist at IHS Markit said: “With new orders growth accelerating, backlogs of work rising and job creation buoyant, the surveys clearly point to an economy that’s generally in expansion mode."
Williamson said that rising price pressures evident in the purchasing manager surveys put a December rate increase back on the table.
The dollar, having been under pressure early on in the trading session returned to the flat line, with the dollar index holding at 92.22.
Against the euro it was also unchanged on the day at $1.1913 and versus the Japanese yen it was 0.5% higher at Y109.37.
Stocks were also higher as the Dow climbed 0.4% to 21,843, while the S&P 500 added 0.4% to 2,468.