WASHINGTON—The key US services sector saw economic activity expand for a third month in a row in September, according to survey data released Thursday, with new orders picking up.
The growth comes weeks ahead of the US presidential election in November, with businesses eyeing the results of the White House race as they firm up plans for 2025 and beyond.
The Institute for Supply Management’s (ISM) services index jumped to 54.9 percent in September, more than analysts expected and up from August’s 51.5 percent reading.
This was also the highest reading since February 2023, ISM said.
A consensus estimate only expected an increase to 51.6 percent, Briefing.com noted, though that would still be above the level of 50 percent mark that separates growth from contraction.
Driving the increase were a 6.6 percentage point rise in the business activity index and a 6.4 percentage point bump in the new orders index.
But the employment index shrank for the first time in three months, ISM said.
And ISM survey chair Steve Miller noted that “concerns over political uncertainty are more prevalent than last month.”
One respondent also voiced worries over potential port labor issues, he added.
“Despite the rise in September, sentiment continues to weigh on the index,” said Matthew Martin, an economist at Oxford Economics.
But he said there remains “plenty room for improvement once political uncertainty fades,” adding that the latest report is a signal that the economy is “still expanding at a brisk pace.”
Survey respondents welcomed the Federal Reserve’s interest rate cut in September — expected to lower borrowing costs over time — even as labor costs and availability remain a problem across industries, Miller said.
The Fed rapidly hiked interest rates in 2022 to tamp down surging inflation, but in September delivered a long-awaited rate cut as price increases cooled.
This is expected to bring a boost to the world’s biggest economy as the effects of the rate reduction ripple through various sectors. AFP
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