Tempe, AZ, United States (4E) – Growth in the non-manufacturing sector in the U.S. accelerated in September but at a slower pace than anticipated, according to an Institute for Supply Management (ISM) report released Thursday.
The ISM non-manufacturing index dropped to a 54.4 reading, a three-month low, from 58.6 in the previous month, according to the Tempe, Arizona-based company on Thursday. While the September reading was in expansion territory of above 50, it is still below the lowest estimate of economists in a Bloomberg News survey.
The ISM report indicates slower hiring activity in the non-manufacturing sector, which is mostly composed of service providers. The employment subindex dropped to 52.7 in September from 57.0 in the previous month.
Other non-manufacturing subindexes edged down after posting high readings in August. The new orders index fell to 59.6 in September from 60.5 in the previous month. The business activity/production index significantly dropped to 55.1 from 62.2 in August.
The ISM inventory index for September slipped to 54.5 from 56.0. Non-manufacturers also faced cost pressures last month as the prices index jumped to 57.2 from 53.4.
Higher homebuilding activity this year has helped service providers like real estate companies, furniture chains and home-improvement retailers. That also benefitted makers of building materials, appliances and furniture.
Data from the non-manufacturing report comes from ISM’s survey of service-sector firms – which account for the biggest part of the U.S. economy – as well as those in construction and public administration.