The Institute for Supply Management (ISM) reported on Thursday that its non-manufacturing index (NMI) came in at 56.9 in August, which was 1.2 percentage points lower than the July reading of 58.1 percent. The reading represented growth in the services sector for the third straight month after contraction in April and May.

Economists forecast the index to decrease to 57.0 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 15 reported increases last month, the ISM said, adding that respondents' comments were mostly optimistic and industry specific about business conditions and the economy as businesses are starting to reopen

According to the report, the ISM’s non-manufacturing Business Activity measure fell 4.8 percentage points to 62.4 percent from July’s figure and the New Orders gauge dropped 10.9 percentage points to 56.8 percent from July’s reading. Meanwhile, the Prices Index jumped 6.6 percentage points to 64.2 percent from July’s reading, the Employment Index increased 5.8 percentage points to 47.9 percent from the July reading, the Supplier Deliveries Index rose 5.3 percentage points to 60.5 percent from July’s figure and the Backlog of Orders Index edged up 0.7 percentage point to 56.6 percent from the July reading.

Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for August (56.9 percent) corresponds to a 2.8-percent increase in real gross domestic product (GDP) on an annualized basis.”