US Services Sector ISM survey Depicted Growth but Weaker Pace in IHS Markit

The US services sector grew to a 21-year high in September, supporting employment of most companies and signals strengthening of the economy by the end of the third quarter.

The optimistic reports on Wednesday keep the course of the interest rates to rise in December. Last week, the US central bank increase their rates for the third time in 2018. Fed Chairman Jerome Powell described on Tuesday that the economy has been “remarkably” well.

Growth will likely be above the trend if the strength on the survey continues, according to the US Economist at Capital Economics in London, Andrew Hunter. This will likely keep the Fed interest rates to move steadily in short-term.

The ISM non-manufacturing activity index rose by 3.1 points to 61.6 in the previous month since August 1997. A reading higher than 50 line, implies expansion representing over two-thirds of the US activity.

Meanwhile, the ISM new orders sub-index for the services sector climbed by 1.2 points from 61.6 last month. The factory employment based on the survey grew to 2.4 in September from 56.7 in August. This implies the September's nonfarm payrolls could work on the upside which is scheduled to be released on Friday.

However, in comparison to the IHS Markit numbers, it shows growth to have a weaker acceleration for this month. Although the ISM survey exhibited positive growth on business conditions last month, there are still concerns on capacity, logistics, adding to the uncertainty brought by the global trade.

Companies encounter issues in the background of a robust economy and tightening labor market conditions. There are increased reports of a hard time in searching for qualified workers to meet the demand, leading to delays in delivering goods and services

There have been reports on the difficulty in the search of qualified workers to meet the demand, resulting in delays in delivery good and services. On a global issue, American just imposed tariffs to China, which in turn, raised costs on some raw materials.