US Services Gauge Falls on Weakest Business Activity Since 2020
The US service sector stalled in September as business activity shrank for the first time since the pandemic and orders barely expanded.
The Institute for Supply Management’s index of services dropped 2 points to 50, a level that indicates stagnation, the group said Friday. The figure was weaker than all estimates in a Bloomberg survey of economists.
The business activity index, which is similar to the ISM's factory output gauge, fell more than five points and into contraction territory for the first time since May 2020.
The measure of new orders dropped 5.6 points to 50.4, erasing almost all of the prior month's gain. Export orders also fell.
The disappointing snapshot of service providers, which make up the largest part of the economy, follows a report earlier this week showing a seventh month of contraction in manufacturing.
Softer orders and business activity coincided with a fourth month of shrinking employment, albeit at a slower pace in September.
Stronger bookings and sales are likely needed to encourage companies to step up hiring. Economists and policymakers will be relying more on private reports such as the ISM survey for insights into the job market and broader economy in the absence of official data because of the US government shutdown.
Delivery times also lengthened in September in the wake of a jump in orders a month earlier. The ISM index of supplier deliveries rose 2.3 points to the highest level since February. A measure of order backlogs, which last month dropped to the lowest level in 16 years, rebounded but remained in contraction territory.
The group’s prices-paid index ticked up to 69.4, one of the highest in three years.
Meanwhile, a measure of stockpiles dropped to the lowest level since the start of this year even as a related gauge showed a slight pickup in concerns inventories are too high.
Source: Bloomberg
