US services sector activity slows more sharply than anticipated in September
Services sector activity in the States cooled more sharply than anticipated last month, amid a rapid decline in new orders and a slower pace of hiring, the results of a key survey showed.
The Institute for Supply Management's non-manufacturing Purchasing Managers' Index fell from a reading of 56.4 for August to 52.6 in September, falling short of economists' forecasts for a print of 55.0.
Significantly, the closely-followed sub-index for 'new orders' fell back from a reading of 60.3 to 53.7 while that for 'employment' retreated from 53.1 to 50.4.
Gauges tracking companies' 'order backlogs' and 'new export orders' on the other hand picked up.
So did price pressures, with the 'prices paid' sub-index edging higher from 58.2 to 60.0.
Purchasing managers from various industries participating in the survey, including from Agriculture, Information, Support services and Retail mentioned rising costs in their responses, with those in Accommodation and Retail referencing the impact that the trade war was having on their costs.
Ian Shepherdson at Pantheon Macroeconomics labelled Thursday's services ISM report "terrible".
"This is much worse than it looks, because the headline index tends to track the rate of growth of core retail sales, which recently has been very strong," he said.
"The big and widening wedge between rate of sales growth and the ISM index presumably reflects fear of the impact of tariffs on consumer goods on retailers sales and margins, and worries in the non-retail sector that peoples’ broad spending power will be reduced by the need to devote more of their income to paying for tariffed goods."