U.S. Services Index Indicates Modestly Slower Growth In September

(RTTNews) - A report released by the Institute for Supply Management on Monday showed a modest slowdown in the pace of growth in U.S. service sector activity in the month of September.

The ISM said its services PMI dipped to 54.9 in September after rising to 55.4 in August, although a reading above 50 still indicates growth. Economists had expected the index to edge down to 55.0.

The services PMI gave back ground after reaching its highest level since hitting 56.1 in February in the previous month.

The modest pullback by the headline index came amid a notable decrease by the business activity index, which slumped to 56.5 in September from 61.7 in August.

The new orders index also slipped to 59.8 in September from 60.9 in August, indicating a slowdown in the pace of growth in new orders.

Meanwhile, the report said the employment index climbed to 50.1 in September from 47.8 in August, moving into expansion territory for the first time in three months.

"The Employment Index's first reading above 50 percent in three months seems to have resulted from increasing backlogs, as well as high levels of business activity and new orders," said Steve Miller, Chair of the ISM Services Business Survey Committee.

He added, "Although business activity and new orders growth rates have eased a bit, the Backlog of Orders index hit its highest level since July 2022 (58.3 percent)."

On the inflation front, the ISM said the prices index climbed to 74.0 in September from 72.6 in August. The prices index also reached its highest level since July 2022.

A separate report released by the ISM last Thursday showed manufacturing activity in the U.S. expanded for the ninth consecutive month in September.

The ISM said its manufacturing PMI edged down to 54.5 in September from 54.6 in August, but a reading above 50 still indicates growth. Economists had expected the index to inch up to 55.0.