Services sector continues positive trend in September
Economic activity in the services sector continued to expand in September, according to the latest ISM Services PMI Report. The Services PMI registered 54.9%, the 27th consecutive month in expansion territory.
The report was issued Oct. 5 by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee:
“In September, the Services PMI registered 54.9%, a decrease of 0.5 percentage point compared to August’s figure of 55.4%. The Business Activity Index remained in expansion territory in September, decreasing 5.2 percentage points to 56.5% from August’s reading of 61.7%. The New Orders Index registered 59.8%, 1.1 percentage points below August’s figure of 60.9%. The Employment Index moved into expansion territory for the first time in three months with a reading of 50.1%, a 2.3-percentage point increase from the 47.8% recorded in August.
“The Supplier Deliveries Index registered 53.2%, 1.9 percentage points higher than the 51.3% recorded in August. This is the 22nd consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM PMI Reports index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The Prices Index registered above 70% for the sixth time in seven months; the reading of 74% in September is 1.4 percentage points above August’s figure of 72.6% and the highest since July 2022 (74.5%). The index has exceeded 60% for 22 straight months, and its 12-month average increased by 0.5 percentage point to 69%, the highest since March 2023.
“The Inventories Index registered 57.8%, up 1.1 percentage points from August’s figure of 56.7%. The Inventory Sentiment Index expanded for the 41st consecutive month, registering 51.7%, down 2.4 percentage points from August’s figure of 54.1%. The Backlog of Orders Index remained in expansion territory for an eighth straight month, increasing one percentage point to 56.6% in September from August’s reading of 55.6%. The New Export Orders dropped below 50% for the first time in eight months, registering 46.9%, a decrease of 9.4 percentage points from the 56.3% recorded in August. The Imports Index recorded a third straight month in expansion territory; the figure of 52.9% in September is a decrease of 3.4 percentage points compared to the 56.3% registered in August.
“Thirteen industries indicated growth in September, one more than the previous month, while four reported contraction, one fewer than in August. The September Services PMI reading of 54.9% is 0.8 percentage point above the 12-month average of 54.1%. The uptick of 0.4 percentage point over August’s 12-month average of 53.7% marks the ninth straight month that figure has increased.”
Miller continues, “Lumber and pork products were the only commodities reported as down in price in September, with fuel reported as up in price for an eighth month in a row. Petroleum-related products, diesel and gasoline were again reported as up in price in September, as was memory products for the ninth month in a row. The number of commodities in short supply increased from six to seven, with switchgear and computers and related products being notable additions. The Supplier Deliveries Index continued to indicate slower performance, reversing a four-month decline with an increase to 53.2% but still below its 12-month average of 53.7%.
“The Employment Index (50.1%) returned to slight expansion after two months in contraction while also moving above its 12-month average of 49%. The New Orders and Backlog of Orders indexes were also above their 12-month averages.
“Tariffs and fuel cost impacts were the most cited issues impacting respondents’ supply chains; in fact, fuel costs were mentioned twice as often as any other single issue impacting performance. Supply chain constraints were also a top concern of respondents and were impacting both lead times and costs. The Employment Index’s first reading above 50% in three months seems to have resulted from increasing backlogs, as well as high levels of business activity and new orders. Although business activity and new orders growth rates have eased a bit, the Backlog of Orders index hit its highest level since July 2022 (58.3%).”
INDUSTRY PERFORMANCE
The 13 services industries reporting growth in September — listed in order — are: Wholesale Trade; Real Estate, Rental & Leasing; Other Services; Public Administration; Retail Trade; Educational Services; Utilities; Information; Transportation & Warehousing; Finance & Insurance; Accommodation & Food Services; Health Care & Social Assistance; and Professional, Scientific & Technical Services. The four industries reporting a contraction in the month of September are: Agriculture, Forestry, Fishing & Hunting; Mining; Construction; and Management of Companies & Support Services.
INDUSTRIAL SUPPLY MAGAZINE
The September/October issue of Industrial Supply magazine features an in-depth cover story about Rotator Products. Plus, we're featuring articles by contributing writers Dr. Bharani Nagarathnam and Frank Hurtte, as well as interviews with numerous product and distribution industry experts.
