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Service sector expands more slowly in September, trade group says

Service sector expands more slowly in September, trade group says

The U.S. service sector expanded at its slowest pace in more than three years in September, reflecting managers' fears about the nation's economy, interest rates and security issues, a trade group said Wednesday.
Tempe, Arizona-based Institute for Supply Management said its index of business activity for the service sector, which equals about two-thirds of the nation's economic activity, registered 52.9 in September, well below August's reading of 57 and lower than the 56 that analysts were expecting.
A reading of 50 or more indicates expansion, while below 50 shows contraction. The September figure represented the 42nd consecutive month of growth but is the lowest reading since April 2003, when the seasonally adjusted reading was 52.1.
While the business activity index is down 4.1 percentage points from last month, the two sub-indexes of new orders and employment were both up, said Hilton Hotels Corp. Senior Vice President of supply management Anthony Nieves. "Looking at those numbers, these lead me to believe that it's not as negative as portrayed by looking at the business activity number."
The service sector includes banking, construction, retailing and travel.
The prices paid index rose at a slower rate in September with a reading of 56.7 versus 72.4 in August. September was the 54th consecutive month prices increased, but the drop-off in the rate of growth signals inflationary pressure may be easing, which could be a sign to the Federal Reserve that it has done enough to curb inflation.
The new orders index registered 57.2 while employment was at 53.6, with both growing more quickly than in August.
The 10 industries that reported growth were mining; retail trade; educational services; health care & social assistance; utilities; wholesale trade; public administration; professional, scientific & technical services; finance & insurance; and management of companies & support services.
Six reported a decline: transportation & warehousing; other services; real estate, rental & leasing; construction; arts, entertainment & recreation; and accommodation & food services. Two industries reported no change. They were agriculture, forestry, fishing & hunting; and information.
The backlog of orders, which had been contracting in August, began growing in September, which managers attributed to a seasonal change. The backlog reading was 53 over 49.5 last month.
Export orders grew faster in September, with a reading of 59, compared to 53 in August, while imports grew more slowly at 55 compared to 60 last month.


Updated : 2021-03-08 12:02 GMT+08:00