US services keep growing as the prices index reaches 74
US services expanded again in September, although the ISM purchasing managers’ index fell to 54.9 from 55.4. The prices index rose to 74, its highest level since July 2022. Employment returned to expansion while business activity and new orders slowed. Respondents cited fuel costs, tariffs and longer delivery times among the pressures on their operations.
Economics & Markets··Night
Services expand for a twenty-seventh month
US services continued to expand in September, with the ISM purchasing managers’ index at 54.9. The reading slipped from August’s 55.4 but remained above the 50 threshold separating expansion from contraction. The national survey covers service businesses’ operations within the United States. Its headline reading combines business activity, new orders, employment and supplier deliveries with equal weights.[1], [2]
The composite has now stayed in expansion for twenty-seven consecutive months. Business activity fell from 61.7 to 56.5, while new orders eased from 60.9 to 59.8. Employment moved in the opposite direction, rising from 47.8 to 50.1 after two months of contraction. Thirteen industries reported growth in September and four reported contraction.[1]
Prices paid rise as deliveries slow
Prices paid increased from 72.6 to 74, the highest reading since 74.5 in July 2022. The prices index’s twelve-month average reached 69. Seventeen industries reported higher prices, with none reporting a decline at industry level. These diffusion indexes record the direction and breadth of monthly changes reported by firms, rather than percentage changes in prices or output.[1]
Supplier deliveries rose from 51.3 to 53.2, marking a twenty-second consecutive month of slower performance. For this component, a reading above 50 here means slower deliveries. Survey committee chair Steve Miller said fuel costs were mentioned twice as often as any other single issue affecting performance. Respondents also cited tariffs, longer lead times and constraints on material availability.[1]
Export orders contract while inventories grow
New export orders dropped from 56.3 to 46.9, entering contraction for the first time in eight months. Imports also slowed, from 56.3 to 52.9, although that index remained in expansion. Inventories increased from 56.7 to 57.8, and order backlogs rose from 55.6 to 56.6 in the same September survey.[1]
Fuel prices have been reported higher for eight months and memory-product prices for nine months. Computers and switchgear joined the list of products in short supply in September.[1]
