Economic activity in the services sector expanded for the third consecutive month in September, according to the latest Institute for Supply Management (ISM) services Report On Business. The services PMI registered 54.9%, which is the highest reading since February 2023 and indicates sector expansion for the 49th time in 52 months.
The report was issued by Steve Miller, chair of the ISM services business survey committee, said.
“In September, the services PMI registered 54.9%, 3.4 percentage points higher than August’s figure of 51.5%. The reading in September marked the seventh time the composite index has been in expansion territory this year,” Miller said. “The business activity index registered 59.9% in September, 6.6 percentage points higher than the 53.3% recorded in August, indicating a third month of expansion after a contraction in June. The new orders index expanded to 59.4% in September, 6.4 percentage points higher than August’s figure of 53%. The employment index contracted for the first time in three months; the reading of 48.1% is a 2.1-percentage point decrease compared to the 50.2% recorded in August.”
“The supplier deliveries index registered 52.1%, 2.5 percentage points higher than the 49.6% recorded in August. The index returned to expansion in September — indicating slower supplier delivery performance — after two months in contraction or ‘faster’ territory. (Supplier deliveries is the only ISM Report On Business index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.),” Miller said. “The prices index registered 59.4% in September, a 2.1-percentage point increase from August’s reading of 57.3%. The inventories index remained in expansion territory for a second month in September after two consecutive months of contraction, registering 58.1%, an increase of 5.2 percentage points from August’s figure of 52.9%. The inventory sentiment index (54%, down 0.9 percentage point from August’s reading of 54.9%) expanded for the 17th consecutive month. The backlog of orders index remained in contraction territory for its second consecutive month, registering 48.3% in September, a 4.6-percentage point increase from the August reading of 43.7%.”
“Twelve industries reported growth in September, up two from the 10 industries reporting growth in August. The services PMI has expanded in 19 of the last 21 months dating back to January 2023, and the September reading is well above its average for 2024,” Miller said. “The increase in the services PMI in September was driven by boosts of more than 6 percentage points for both the business activity and new orders indexes. The employment and supplier deliveries indexes had mixed results, with a 2.1-percent decrease and 2.5-percent increase, respectively. The supplier deliveries index returned to expansion in September, indicating slower delivery performance. The stronger growth indicated by the index data was generally supported by panelists’ comments; however, concerns over political uncertainty are more prevalent than last month. Pricing of supplies remains an issue with supply chains continuing to stabilize; one respondent voiced concern over potential port labor issues. The interest-rate cut was welcomed; however, labor costs and availability continue to be a concern across most industries.”
The 12 services industries reporting growth in September — listed in order — are:
- Real estate, rental & leasing
- Management of companies & support services
- Accommodation & food services
- Mining
- Public administration
- Health care & social assistance
- Finance & insurance
- Construction
- Transportation & warehousing
- Information
- Educational services
- Utilities
The five industries reporting a contraction in the month of September are:
- Other services
- Agriculture, forestry, fishing & hunting
- Wholesale trade
- Professional, scientific & technical services
- Retail trade
