The biggest part of the world’s largest economy held up in August, closely-watched survey data released on the eve of the government’s all-important jobs report indicated.

ISM’s services sector gauge printed 51.5 on the headline, up a tick from the prior month and marginally ahead of consensus.

Although not exactly a barnburner, the expansion-territory print came as a relief in light of ongoing struggles for American manufacturing and generalized slowdown concerns.

In that regard, this was déjà vu all over again: Last month, a solid read on ISM services helped allay hard landing worries fanned by a very poor read on manufacturing activity.

Meanwhile, S&P Global’s gauge suggested US services activity was the briskest since March of 2022 in August. 55.7 — the headline — was marked up from the 55.2 flash print.

“An improvement in the headline services PMI to its highest for nearly two-and-a-half years provides further encouraging evidence that the US economy is enjoying robust economic growth in the third quarter, adding to signs of a ‘soft landing,'” S&P Global’s Chris Williamson effused. “The faster service sector expansion means the PMI surveys are signaling GDP growth of 2-2.5% in Q3.”

You’re not going to get a US recession — and certainly not a deep one — if the services sector continues to expand at anything like a healthy clip. With apologies, manufacturing just doesn’t matter all that much for the US in the grand scheme of things. You could argue that’s a bad thing. And I wouldn’t (necessarily) disagree. It’s certainly an albatross for America’s political establishment. Disaffection among blue collar workers is a major contributor to the collapse of the political center. But for the purposes of macro forecasting, solid services activity trumps a manufacturing downturn every time.

Anyway, the ISM anecdotes all told the same story. “Generally, business is good,” one respondent said. “Activity is increasing,” said another. And another: “Business continues to be strong.” And still another: “Up in business and activity.” You get the idea. There was one exception. A panelist from construction lamented the drag from high rates, which continue to cast a pall over “all segments of the industry.”

The employment gauge in the ISM survey moved lower to 50.2, but August marked the first time since Q4 that the index managed to stay in expansion territory for consecutive months.

There again we see a hiring impulse that’s subdued compared to the frantic environment that typified the post-pandemic macro experience, but which is far from tipping a recession.

The prices gauge moved up to 57.3. That was a multi-month high and it’s too hot. Or too warm, if you think “hot” counts as alarmist.

For what it’s worth, S&P Global’s survey showed a “modest” decrease in employment. “Respondents often reported that leavers had not been replaced, mostly due to cost considerations,” the release noted.

Bottom line: There wasn’t a recession narrative in the August US services PMIs. “Realistically, ISM services need[ed] to come in below the consensus and the employment index need[ed] to fall back below 50 to sustain expectations of a 50bps [Fed] cut this month,” SocGen’s Kit Juckes remarked.

That brings us back to the same inevitable conclusion: Friday’s jobs report will decide the size of the September Fed cut.