The Institute
for Supply Management (ISM) announced on Thursday that its Services PMI came in
at 54.9 per cent in September, recording a climb of 3.4 percentage points from
an unrevised August reading of 51.5 per
cent. The latest figure
indicated that economic activity in the U.S. services sector expanded at the strongest pace since February 2023.
Economists had expected
the indicator to increase to 51.7 in September.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
According to
the report, the Production index surged by 6.6 percentage points to 59.9 per
cent in September, marking the third month of growth in production across the
services sector. In addition, the New Orders gauge soared by 6.4 percentage
points to 59.4 per cent, suggesting new orders grew for the third consecutive
month. The Inventories indicator jumped by 5.2 percentage points to 58.1 per
cent, remaining in expansion territory for the second month in a row. The
Supplier Deliveries indicator increased by 2.5 percentage points to 52.1 per
cent, indicating slower performance for the first time in three months. Meanwhile,
the Employment measure declined 2.1 percentage points to 48.1 per cent,
indicating employment activity in the services sector reduced in September for
the first time in three months. On the price front, the Prices index rose by 2.1 percentage
points to 59.4 per cent, indicating that prices paid by services organizations for materials and
services increased in September for the 88th month running.
Commenting on
the data, Steve Miller, Chair of the Institute for Supply Management (ISM)
Services Business Survey Committee, noted that stronger growth indicated by the
index data was generally supported by panellists' comments but concerns over
political uncertainty were more prevalent than last month. He also added that pricing
of supplies remains an issue with supply chains continuing to stabilize and one
respondent voiced concern over potential port labour issues. “The interest-rate
cut was welcomed; however, labour costs and availability continue to be a
concern across most industries," Miller added.