In August, the US non-manufacturing ISM unexpectedly improved. The headline index rose from 52.7 to 53.3, reversing previous month’s decline, while the consensus was looking for a drop to 51.0. The details show a mixed picture as business activity (55.6 from 56.1), inventory change (53.5 from 56.5), inventory sentiment (56.0 from 59.5) and employment (51.6 from 52.5) deteriorated, while new orders (52.8 from 51.7) picked up slightly. Backlog of orders (47.5 from 44.0), supplier deliveries (53.0 from 50.5), new export orders (56.5 from 49.0) and imports (53.5 from 47.5) showed a more significant increase. Cost pressures accelerated again in August as prices paid jumped significantly from 56.1 to 64.2. While both employment and business activity weakened in August, the outlook is more encouraging as both new orders and new export orders picked up, boding well for the coming months. After already an upward surprise in the manufacturing ISM, this outcome suggests that analysts had become too pessimistic. Nevertheless, the risks for a double dip recession remain in place as the manufacturing ISM is at stagnation levels and especially as the labour market remains extremely weak.