Washington, Oct 5, 2022 (AFP)
Growth in the dominant US services sector edged down in September on slower demand, but supply issues improved, according to an industry survey released Wednesday.
The Institute for Supply Management's services index ticked down to 56.7 percent last month, slightly below August but well above the 50-percent threshold indicating growth.
The services sector "had a slight pullback in growth" in September due to decreases in business activity and new orders, ISM survey chair Anthony Nieves in a statement said.
The new orders index dropped 1.2 percentage points from August, while business activity was 1.8 points lower as well, the report said. The employment index accelerated again after two prior months of declines.
Although companies responding to the survey indicated that "there have been improvements regarding supply chain efficiency, operating capacity and materials availability," Nieves said performance remains less than ideal.
One respondent from a retail trade firm noted that the semiconductor supply challenges "shos no signs of abating."
The US services sector accounts for two-thirds of the world's largest economy and includes areas such as education, IT and medicine.
Despite the recent surge in inflation, the sector has expanded for 152 months, excluding a two-month contraction in April and May 2020 when the United States grappled with the start of the coronavirus outbreak.
The ISM survey showed prices dropped for a fifth straight month but noted businesses still have trouble replenishing their stocks.
The Federal Reserve is working to fight soaring inflation, spurred by international supply chain challenges, and has been raising interest rates to cool demand.
Respondents said they continued to be hit by inflation worries and logistics issues involving China given the country's adherence to a strict zero-Covid policy that has sealed off cities.
Even so "all the key supply chain measures improved again," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
He added that the pick-up in September's employment index brought it to the highest level since March.
While the survey data was better than expected, Rubeela Farooqi of High Frequency Economics said service sector activity is likely to "slow in response to softening demand from Fed rate hikes."
Sumber : AFP
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