U.S. Service-Industries Index at 12-Year High Following StormsBy
America's service industries expanded in
September at the fastest clip in 12 years, signaling vibrancy
across the bulk of the economy following two major hurricanes, a
survey from the Institute for Supply Management showed
Highlights of ISM Non-Manufacturing (September)
- Non-manufacturing index jumped to 59.8 (est. 55.5), the highest since August 2005, from 55.3; readings above 50 indicate growth
- Measure of new orders advanced to a five-month high of 63, from 57.1
- Employment index rose to 56.8, the strongest since May, from 56.2
- Gauge of prices paid for materials and services surged to 66.3, the highest since February 2012, from 57.9
Combined with the fastest pace of manufacturing growth since May
2004, as reported by the Tempe, Arizona-based ISM earlier this
week, the report on services shows the economy is snapping back
from any hurricane-related setback.
The biggest one-month advance in the group's orders index in a
year, rising backlogs and healthier business activity may be
partly explained by recovery efforts and robust demand in the
aftermaths of hurricanes Harvey and Irma. At the same time, the
Federal Reserve and most economists expect the storms to have
little long-term impact on the broader economy.
As was the case for factories, delivery times for non-
manufacturing businesses lengthened and were the slowest since
Hurricane Katrina in 2005 as the energy-intensive Gulf Coast of
Texas took time to get back on its feet. The surge in demand
helps explain the jump in prices for supplies last month.
Still, a gauge of export demand also perked up to a four-month
high in September, indicating global markets are recovering and
fueling sales at American companies.
The industries in the ISM's non-manufacturing index account for
about 90 percent of the economy and include sectors such as
utilities, retailing, health care, and construction.
- Index of business activity, which parallels the ISM’s factory production index, climbed to a five-month high of 61.3 from 57.5
- Gauge of order backlogs rose to 56 from 53.5; export orders measure advanced to 56 from 55
- Supplier deliveries gauge jumped to 58 from 50.5, marking the largest single-month advance since August 1997, when the survey of service industry purchasing managers was in its infancy
- The 8.4-point increase in the ISM prices-paid gauge was the largest since October 2010
— With assistance by Alexandre Tanzi