The numbers: An ISM barometer of U.S. business conditions at service-oriented companies such as retailers and health-care providers fell slightly in September to 53.6% and indicated some softening in the economy.
The reading matched the forecast of economists polled by The Wall Street Journal. The index registered 54.5% in August.
Numbers over 50% are viewed as positive for the economy. The index has hovered between 50% and 55% since the beginning of the year.
“There has been a slight pullback in the rate of growth for the services sector,” said Anthony Nieves, chairman of the survey. “The majority of respondents remain positive about business conditions,” he added, but “some respondents indicated concern about potential headwinds.”
Key details:
- The production gauge edged up 1.5 points to 58.8%.
- The new-orders index fell 5.7 points to a nine-month low of 51.8%, a potential warning sign. Orders fall when the economy weakens.
- The employment barometer slid 1.3 points to 53.4%.
- The prices-paid index, a measure of inflation, was unchanged at 58.9%. That indicates residual price pressures in the economy, a problem that could get worse because of the rising cost of oil.
Big picture: The economy is expanding and the third quarter could be the strongest of the year.
Yet signs are emerging that high interest rates are starting to restrain growth, though the threat of recession appears low for now. Businesses are still hiring and unemployment is near a record low.
Looking ahead: “Overall, the signal from today’s data is that sentiment around the service sector remains positive but momentum appears to be gradually fading,” CIBC economics wrote in a note to clients.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were mixed in Wednesday trades.
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