US service sector data mixed: S&P Global PMI hits 5-year high, ISM falls short
Two US service sector surveys show divergent results. ISM non-manufacturing PMI fell to 54.9 in September, below expectations, while S&P Global's services PMI rose to 58.8, a five-year high. S&P Global forecasts Q3 annualised GDP growth of about 4%, with September alone at 5%.
Two sets of US service sector data released on 5 October showed contrasting performances. The Institute for Supply Management (ISM) reported its non-manufacturing Purchasing Managers' Index (PMI) fell to 54.9 in September from 55.4 in August, below market expectations. The reading indicates a slowdown in service sector expansion, with services accounting for more than two-thirds of US economic activity.
The ISM data showed the new orders sub-index retreated to 59.8, down from a roughly three-and-a-half-year high. Supplier delivery times slowed for the 22nd consecutive month, pushing input prices up to 74 from 72.6, suggesting elevated inflationary pressures could persist into next year. Employment conditions, however, improved.
In contrast, S&P Global reported its US composite PMI rose to 58.4 in September from 56 in August, while the services PMI climbed to 58.8 from 56.5, marking the fastest expansion in more than five years. The gains were driven by new orders growing at the quickest pace in four-and-a-half years. Fuel prices pushed up costs, accelerating selling price increases, indicating inflation will remain elevated.
S&P Global said that combining service and manufacturing sector performance points to annualised US economic growth of about 4 per cent in the third quarter, with September alone reaching 5 per cent. It predicted the pace would accelerate further in the fourth quarter.