Street Calls of the Week
Investing.com - U.S. services sector activity was unchanged in September, while a measure of employment in the segment contracted for the fourth straight month.
The Institute for Supply Management’s non-manufacturing purchasing managers index came in at 50 last month, hitting the breakeven point between expansion and contraction for the first time since January 2010. Economists had anticipated the metric would stand at 51.8, compared to 52.0 in August.
In a statement, Steve Miller, Chair of the ISM’s Services Business Survey Committee said September’s level returned to numbers "very similar" to May and July, with commentary from executives indicating "moderate or weak growth" in the services industry.
An index measuring employment ticked higher to 47.2, up from 46.5 in August but still well within the sub-50 contraction territory, due to a combination of delayed hiring efforts and difficulty finding qualified staff, Miller said.
The employment gauge may receive additional scrutiny because of an ongoing U.S. government shutdown, which has led to the delay of key official economic data, including the all-important nonfarm payrolls report on Friday.
A slowing U.S. labor market was cited as a key motivating factor behind the Federal Reserve’s decision last month to restart a cycle of monetary policy easing, with the central bank slashing interest rates by 25 basis points and signaling that more reductions could be coming this year. In theory, drawing down borrowing costs can help boost investment and hiring, albeit at the risk of driving up inflation.
To that end, a metric of prices paid by services organizations registered 69.4, rising from 69.2 in August. It was the second-highest mark since October 2022, as some companies flagged that the cost of sweeping U.S. tariffs is beginning to be felt.