U.S. Services Sector Leaps Forward, ISM Survey Suggests

By Joshua Kirby

U.S. services activity picked up at a greater pace than expected last month, pointing to increasing demand in the sector, a survey of managers showed Thursday.

The Institute for Supply Management's services-activity index increased to 54.9 in September from 51.5 in August, well beyond the small increase expected by economists polled by The Wall Street Journal. It marks a third-straight month that the index has grown beyond the 50 mark that represents the hinge between contraction and expansion.

The gauge of new orders leapt by more than six points, a sign of healthy demand for services. By contrast, the employment index edged down, suggesting some weakness in the sector's jobs market.

Twelve industries reported growth over the month, led by real estate, corporate services, and accommodation & food services. Only five reported contraction, including agriculture, fishing and wholesale trade.

"Pricing of supplies remains an issue with supply chains continuing to stabilize," said Steve Miller, chair of the ISM's services business survey committee. September's cut to interest rates by the Federal Reserve was welcomed by services businesses, though labor costs and availability continue to be an issue, Miller said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

October 03, 2024 10:33 ET (14:33 GMT)

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