U.S. September ISM Services - Strongest since February 2023, but now close to S and P services PMI
September’s ISM services index at 54.9 is the strongest since February 2023 and a sharp rise from August’s 51.5. It brings the index closer to the S and P Services PMI of 55.2, which has been close to 55 for five straight months. We viewed the strength of the S and P index as due to expectations for lower rates. That Fed easing has started may be supporting the ISM data.
Business activity at 59.9 from 53.3 and new orders at 59.4 from 53.0 both saw strong gains, with the latter also the strongest since February 2023, but employment slipped to 48.1 from 50.2.
The fourth and final contributor to the composite is delivery times, which was firmer at 52.1 from 49.6. The approach of a strike at East Coast ports may be a factor here. It may also be a factor in a sharp rise in inventories to 58.1 from 52.9, though that does not contribute to the composite.
Prices paid also do not contribute to the composite and were a little firmer at 59.4 from 57.3. The range is still tight but this reading is the highest since January. The ports strike is an upside risk to prices.
