Economy

Service Sector Expands More than Forecast in September

Service sector employee, nurse at a hospital. (Photo: REUTERS)

The Non-Manufacturing (NMI) Report On Business, the Institute of Supply Management (ISM) gauge of service sector activity, increased to 57.1 in September. The reading, which marks an 11-month high, or the highest level since October 2015, followed a steep drop in August and topped the forecast of 53.0.

A reading above 50 indicates expansion in the service sector.

Increases in the index during September were broad-based, as business activity and the employment sub-indices both reached 11-month highs. The report was in line with the ADP National Employment Report released on Wednesday showing U.S. private employers added 154,000 jobs in September, slightly below economists’ expectations. The report continued to find the service, which accounts for more than two-thirds of U.S. economic activity, led the way industry-wise.

However, with wages stagnant or at best rising slowly, the lower-paying service sector is welcomed growth but not enough needed to move the needle. The more closely-watched monthly U.S. jobs report is scheduled for release on Friday.

The Commerce Department also reported earlier on Wednesday that the U.S. trade deficit rose more than expected in August as a sharp increase in imports easily offset higher exports. The trade gap widened 3% to $40.73 billion.

ISM^® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM^® NON-MANUFACTURING AND ISM^® MANUFACTURING SURVEYS* SEPTEMBER 2016
	Non-Manufacturing						Manufacturing
Index	Series Index Sep	Series Index Aug	Percent Point Change	Direction	Rate of Change	Trend** (Months)	Series Index Sep	Series Index Aug	Percent Point Change
NMI^®/PMI^®	57.1	51.4	+5.7	Growing	Faster	80	51.5	49.4	+2.1
Business Activity/Production	60.3	51.8	+8.5	Growing	Faster	86	52.8	49.6	+3.2
New Orders	60.0	51.4	+8.6	Growing	Faster	86	55.1	49.1	+6.0
Employment	57.2	50.7	+6.5	Growing	Faster	4	49.7	48.3	+1.4
Supplier Deliveries	51.0	51.5	-0.5	Slowing	Slower	9	50.3	50.9	-0.6
Inventories	51.5	48.0	+3.5	Growing	From Contracting	1	49.5	49.0	+0.5
Prices	54.0	51.8	+2.2	Increasing	Faster	6	53.0	53.0	0.0
Backlog of Orders	52.0	49.5	+2.5	Growing	From Contracting	1	49.5	45.5	+4.0
New Export Orders	56.5	46.5	+10.0	Growing	From Contracting	1	52.0	52.5	-0.5
Imports	51.0	50.5	+0.5	Growing	Faster	8	49.0	47.0	+2.0
Inventory Sentiment	64.5	64.0	+0.5	Too High	Faster	232	N/A	N/A	N/A
Customers’ Inventories	N/A	N/A	N/A	N/A	N/A	N/A	53.0	49.5	+3.5
Overall Economy				Growing	Faster	86
Non-Manufacturing Sector				Growing	Faster	80

* Non-Manufacturing ISM^® Report On Business^® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.

** Number of months moving in current direction.

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PPD Business Staff

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.