Stall speed in services while prices paid remains high and a look on employment

The September ISM services index fell to exactly 50 from 52 in August and compares with the estimate of 51.7. That’s also the 2^nd lowest print since June 2024. The Business Activity component fell 5.1 pts to 49.9.

New orders were down 5.6 pts to 50.4, giving back the August 5.7 pt rise. Backlogs bounced by 6.9 pts but remains below 50 at 47.3. After three months above 50, inventories fell 5.4 pts to 47.8. Employment at 47.2 is under 50 for the 4^th straight month, and below that threshold for the 6th month in the past 7, though up .7 pts m/o/m with 6 industries adding workers out of 18 vs 2 in August and 7 in July. Prices paid remained elevated and well above 50 at 69.4 vs 69.2 in August and 69.9 in July. Within prices paid, 15 of 18 industries said they paid higher prices in the month vs 16 in August and 15 in July.

This was an interesting comment on the housing sector within the ‘new orders’ component, “Buyers are sitting on the sidelines waiting for mortgage rates to drop; some buyers are having difficulty selling their home and are not able to purchase a new one unless they do.”

In the backlogs section, this stood out: “Major capital projects with the exception of data centers are being delayed.”