U.S. ISM Services PMI Weakens in September
by:Tom Moeller
|in:Economy in Brief
Summary
- Decline reverses half of August’s increase.
- New orders and employment readings fall.
- Price index holds steady.
The pace of business activity in the service sector slowed last month. According to the Institute for Supply Management, the ISM Services PMI fell to 53.6 in September after increasing to 54.5 in August. The index stood at 52.7 in July. Despite the decline, the index remained up from a low of 49.2 in December 2022. The Action Economics Forecast Survey called for 53.5. A reading above 50 represents an increase in activity.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading released Monday. This index weakened to 53.0 in September from 53.6 in August. The series dates back to July 1997.
In the latest services survey, new orders plunged to 51.8 from 57.5 in August. It was the lowest reading since December 2022. A lessened 27.8% (NSA) of respondents reported higher new orders in September while 16.3% reported fewer. The employment index fell to 53.4 from 54.7. An increased 21.9% (NSA) of respondents reported more hiring while 14.1% reported a decline.
Working higher, the September business activity index rose to 58.8 from 57.3 as 34.2% (NSA) of respondents reported increased activity while 10.7% reported a decline. The supplier deliveries index improved to 50.4 in September from 48.5. It was the highest level since November of last year, up from a March low of 45.8.
The prices index was unchanged at 58.9 in September. It remained increased from a low of 54.1 in June, but stood below the record 84.5 in December 2021. An increased 24.2% (NSA) of respondents reported price gains while 9.5% reported price declines.
In other series, the new export orders index rose to 63.7 in September from 62.1 in August. It remained slightly below their record highs. The imports index fell to 50.6 in September and stood below the June high of 54.6. The order backlog series strengthened to 48.6 from 41.8 in August. The inventory sentiment index reversed earlier gains and fell to 54.8, its lowest level in three months. These series are not seasonally adjusted and are not included in the ISM Services PMI total.
The ISM figures are available in Haver’s USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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