WASHINGTON Reuters -- The U.S services industry slowed modestly in September, while employment surged and a measure of prices paid by businesses for inputs fell to more than a 1 -- 1 2 year low, suggesting strength in the economy despite rising interest rates.
The Institute for Supply Management ISM said on Wednesday its non-manufacturing PMI fell to 56.7 last month from 56.9 in August. Economists polled by Reuters had predicted the non-manufacturing PMI to fall to 56.0.
A reading above 50 indicates the expansion of the services sector, which accounts for more than two-thirds of the U.S. economic activity. The Federal Reserve tightens monetary policy to prevent inflation, as the economy is slowing down.
The U.S. central bank has hiked its policy rate from near zero to 3.25% at the beginning of this year to 3.00%, and last month signaled that there were more large increases on the way this year.
The housing market is being affected by higher borrowing costs, and is beginning to strain the manufacturing industry. The ISM reported on Monday that its manufacturing PMI fell to the lowest reading since May 2020.
Demand for services is starting to slow, and services activity is supported by a shift in spending from goods.
The businesses reported a rise in exports.
Its services industry employment gauge went up to 53.0 from a reading of 50.2 in August. The jump suggested that demand for labor remains strong even though job openings fell by the most in nearly 2 -- 1 2 years in August. The government reported on Tuesday that there were 10.1 million job openings in August, down from 11.2 million in July.
The ISM survey's supplier deliveries fell to 53.9 from 54.5 in August. The backlog of unfinished work was reduced as supply chains continued to improve and employment increased. It resulted in services inflation decelerating considerably last month.
The lowest reading since January 2021 was reached by the services industry's prices for inputs at 68.7, the lowest reading since January 2021, from 71.5 in August. The manufacturing survey showed that inflation had peaked, although the descent will probably be slow due to higher prices for sticky components like rents.