US ISM: Service sector activity remained solid in September – Wells Fargo

Data released on Wednesday showed the ISM Services Index dropped in September to 56.7, a reading above the 56 expected. Analysts at Wells Fargo point out the report is still consistent with expansion in the sector. They argue most of the details indicate continued growth with some modest giveback in the pace of activity.

Key Quotes: 

“Service sector activity remained solid in September. The headline reading on the ISM Services Index declined, signaling a slower pace of activity last month, but at 56.7 it was higher than the consensus expectation and still signals expansion.”

“Most major components of the index declined last month, with the employment index being one of the lone bright spots. The employment component rose 2.8 points to 53.0, marking the highest reading in six months. Squaring this with the pullback in the manufacturing employment counterpart indicates another solid but slightly slower gain in hiring last month compared to August.”

“Continued upward pressure on wages is perhaps partly behind the more modest decline in the prices paid component for services industries compared to manufacturing. The prices paid component slid 2.8 points to 68.7, whereas the counterpart in the manufacturing ISM currently sits at 51.7.”