The ISM services index fell to 58.6 in September from 59.6 in August.
This was slightly better than the 58.5 expected by economists. Also, any reading above 50 signals growth, which means the US services sector is growing at a healthy clip.
From the report: “The New Orders Index registered 61 per cent, 2.8 percentage points lower than the reading of 63.8 per cent registered in August. The Employment Index increased 1.4 percentage points to 58.5 per cent from the August reading of 57.1 per cent and indicates growth for the seventh consecutive month. The Prices Index decreased 2.5 percentage points from the August reading of 57.7 per cent to 55.2 per cent, indicating prices increased at a slower rate in September when compared to August.”
All 12 industries submitting responses to this survey reported growth. Here are some quotes from the report:
- “In the building industry there continues to be a lot of remodeling and smaller additions with replacement facilities and new buildings lagging. Many companies would like to build new, but are still concerned about making the large investment at this time.” (Construction)
- “Far reaching and unprecedented commodity price increase for all animal proteins, produce, dairy, coffee and cocoa.” (Accommodation & Food Services)
- “Orders continue to be steady and forecasts are strong for the remainder of the year. There does not appear to be significant growth, but a steady strong business level.” (Professional, Scientific & Technical Services)
- “Activity is high right now as it is the last month of the government’s fiscal year and all the FY14 appropriated funds are being spent on new and renewing requirements.” (Public Administration)
- “Positive sales growth for the quarter is encouraging. Continue to see pricing pressure in most sectors which directly impact profit.” (Retail Trade)
- “Business remains steady, but not robust.” (Wholesale Trade)
- “Increased manufacturing lead times are requiring additional inventory to be maintained for older aircraft interior parts and new aircraft systems parts.” (Transportation & Warehousing)
- “Fuels/propane prices rose slightly.” (Utilities)
Markit Services PMI
Earlier, we learned the September Markit services PMI was revised up to 58.9 from a preliminary (Flash) estimated of 58.5.
This was down from 59.5 in August.
But the report was still stronger than expected and it reflects a strong pace of growth.
“A slowing in the pace of service sector growth in September matched a similar easing in the pace of manufacturing output growth seen during the month, suggesting the overall pace of economic expansion dipped to the weakest since May.,” Markit’s Chris Williamson said. “But the surveys nevertheless still point to the economy growing at an annualised rate of at least 3% in the third quarter.”