WASHINGTON (dpa-AFX) - A reading on U.S. service sector activity climbed by much more than expected in the month of September, reaching its highest level in well over a year, according to a report released by the Institute for Supply Management on Thursday.
The ISM said its services PMI shot up to 54.9 in September from 51.5 in August, with a reading above 50 indicating growth. Economists had expected the index to inch up to 51.7.
With the much bigger than expected increase, the services PMI reached its highest level since hitting 55.0 in February 2023.
The jump by the headline index reflected significantly faster growth by new orders and business activity, as the new orders index surged to 59.4 in September from 53.0 in August and the business activity index spiked to 59.9 in September from 53.3 in August.
Meanwhile, the employment index fell to 48.1 in September from 50.2 in August, suggesting a downturn by employment in the service sector.
The report also said the prices index rose to 59.4 in September from 57.3 in August, indicating a faster pace of price growth.
'The stronger growth indicated by the index data was generally supported by panelists' comments; however, concerns over political uncertainty are more prevalent than last month,' said Steve Miller, Chair of the ISM Services Business Survey Committee.
'Pricing of supplies remains an issue with supply chains continuing to stabilize; one respondent voiced concern over potential port labor issues,' he added. 'The interest-rate cut was welcomed; however, labor costs and availability continue to be a concern across most industries.'
A separate report released by the ISM on Tuesday showed a continued contraction by U.S. manufacturing activity in the month of September.
The ISM said its manufacturing PMI came in at 47.2 in September, unchanged from August, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 47.5.
Manufacturing activity contracted for the sixth consecutive month and the 22nd time in the last 23 months.
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