A dive into US service sector, both from ISM and S&P Global

The September ISM services index fell to 53.6 from 54.5 and that was about as expected and exactly what the 3 month average now is. New orders fell 5.7 pts m/o/m to 51.8 and that is the lowest of the year. From a few respondents on this, “Slightly lower number of new projects…Decreased guest traffic.” Backlogs rebounded by 6.8 pts but after falling almost 10 pts last month and is still below 50 at 48.6. Inventories were down by 3.5 pts but still above 50 at 54.2. Prices paid held at 58.9 which is the highest since April. Post ADP and ahead of the BLS report, employment fell 1.3 pts to 53.4 but that’s above 50 for a 4^th month.

The breadth was unchanged with August as 13 industries saw growth while 5 experienced a contraction, one of which was in arts/entertainment/recreation which hopefully will reverse assuming the actors come to a labor deal like the writers have.

ISM’s bottom line said “There has been a slight pullback in the rate of growth for the services sector, which is attributed to slower rates of growth in the new orders and employment indexes. The majority of respondents remain positive about business conditions” but “some respondents indicated concern about potential headwinds.”