While Manufacturing Continues to Sink, Services Expansion Persists

By SBE Council at 3 October, 2024, 10:09 pm

by Raymond J. Keating -

As noted in our look at the latest manufacturing PMI from the Institute for Supply Management, manufacturing continued its long struggles in September. But just as manufacturing continued to sink, the services sector, according to ISM's latest services PMI, continued to expand last month.

Specifically, the services PMI came in at 54.9 percent in September, which was up from August's read of 51.5 percent. The ISM's services PMI has been up for three consecutive months, and signaled expansion in 49 of the last 52 months. For good measure, the September read was highest since February 2023. (See the following chart from the ISM release.)

In September, 12 services sectors reported growth:

Real Estate, Rental & Leasing;

Management of Companies & Support Services;

Accommodation & Food Services;

Mining;

Public Administration;

Health Care & Social Assistance;

Finance & Insurance;

Construction;

Transportation & Warehousing;

Information;

Educational Services;

and Utilities.

Meanwhile, 5 sectors experienced contractions:

Agriculture, Forestry, Fishing & Hunting;

Wholesale Trade;

Professional, Scientific & Technical Services;

Retail Trade;

and Other Services.

This clearly is a positive report, but it is worth noting that retail trade was a sector experiencing contraction in September.

Looking ahead, Steve Miller, Chair of the Institute for Supply Management Services Business Survey Committee, noted: "The stronger growth indicated by the index data was generally supported by panelists' comments; however, concerns over political uncertainty are more prevalent than last month. Pricing of supplies remains an issue with supply chains continuing to stabilize; one respondent voiced concern over potential port labor issues. The interest-rate cut was welcomed; however, labor costs and availability continue to be a concern across most industries."

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II:52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.

Public link

Please use the above public link if you want to share this noodl on another website.