US Services Growth Cools in September as ISM PMI Falls to 54.9%

The U.S. services sector maintained its expansion for the 27th straight month in September, though activity grew at a slower pace than expected. The Institute for Supply Management (ISM) Services PMI registered 54.9%, missing the 55.1% consensus forecast and declining from August's 55.4%. The reading signals a moderation in the sector that represents the bulk of the U.S. economy.

Internal components showed the Business Activity Index falling to 56.5% from August's 61.7%, while New Orders cooled slightly to 59.8%. However, the Employment Index returned to expansion at 50.1%, ending a three-month streak of contraction. Financial markets saw the U.S. dollar come under modest pressure following the report, as the data suggested a cooling in service-sector momentum despite the improvement in hiring.