US services activity slowed sharply in September, with ISM Services PMI falling from 52.0 to 50.0, missing expectations of 52.0. Business activity dropped from 55.0 into contraction at 49.9, its first negative reading since May 2020. New orders tumbled from 56.0 to 50.4. The weakness suggests that demand conditions in the largest part of the US economy have cooled significantly.
Employment remained in contraction for a fourth straight month at 47.2, underscoring persistent softness in labor conditions. Prices paid ticked higher to 69.4, staying well above the 60 mark for a 10th month.
Industry-level data reinforced the slowdown: only ten industries reported growth in September, two fewer than August, while the number in contraction rose to seven. Based on historical correlations, ISM said the September PMI level corresponds to a modest 0.4% annualized GDP increase.
