The growth rate of the U.S. services sector moderated in September, while the prices businesses paid for inputs rose, according to a monthly report released Tuesday by the Institute for Supply Management (ISM). The data reflects continued expansion in the sector alongside persistent supply chain constraints and rising costs.
The ISM’s services Purchasing Managers’ Index (PMI) registered 53.6% in September, a decrease of 0.9 percentage points from the 54.5% recorded in August. A reading above 50% indicates that the services sector economy is generally expanding. September marked the ninth consecutive month of growth for the sector.
The report’s details provide further context on business conditions. The New Orders Index, which tracks the level of new business, registered 51.8%, indicating continued demand but at a slower pace of growth compared to previous months. The Business Activity Index fell to 58.8%, a 2.3-percentage point drop from August’s reading of 61.1%.
A key component of the report, the Prices Index, which measures the cost of inputs for service-oriented businesses, increased by 2.2 percentage points to 75.9%. This figure suggests an acceleration in the rate of price increases paid by companies for materials and services.
Furthermore, the Supplier Deliveries Index registered 58.4%. A reading above 50% indicates slower delivery times, and the September figure points to ongoing logistical challenges and supply chain disruptions affecting the sector.
In the report’s official release, Anthony Nieves, Chair of the ISM Services Business Survey Committee, commented on the findings. “There has been a slight pull back in the rate of growth for the services sector,” Nieves stated. “This is due to a combination of factors, including slower new orders growth, a slight cooling in business activity and ongoing supply chain challenges.”
Nieves added that survey respondents’ comments indicated concerns related to the economy and the residual effects of inflation.
The services sector, which includes industries such as hospitality, finance, healthcare, and retail, accounts for more than two-thirds of U.S. economic activity. The monthly ISM report is compiled from surveys of purchasing and supply executives nationwide and is monitored by economists and policymakers as an indicator of overall economic health.
