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U.S. service sector activity rises above pre-pandemic level in September: ISM survey

FILE PHOTO: A woman wearing a protective mask walks past empty tables outside a restaurant, as Miami-Dade County eases some of the lockdown measures put in place during the coronavirus disease (COVID-19) outbreak, in Miami, Florida, U.S., May 18, 2020. REUTERS/Marco Bello

WASHINGTON (Reuters) - U.S. services industry activity picked up in September, pulling above a level that prevailed before the COVID-19 pandemic struck the nation, amid increases in new orders and employment.

The Institute for Supply Management (ISM) said on Monday its non-manufacturing activity index rose to a reading of 57.8 last month from 56.9 in August. That put the index just above its 57.3 level in February.

A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity. Economists polled by Reuters had forecast the index slipping to 56.0 in September.

The improvement in services industry activity fits in with expectations for a record rebound in economic growth in the third quarter after a historic plunge in gross domestic product in the April-June period. The economy got a boost over the summer from fiscal stimulus.

Growth has, however, shifted into low gear as businesses exhaust government loans to help them with expenses like wages and funding for a weekly unemployment subsidy for millions runs out. New coronavirus cases are rising, with a surge expected in the fall, which could lead to some restrictions being imposed on businesses in the services sector.

The ISM reported last week that factory activity slowed in September as new orders retreated from a more than 16-1/2-year high. The government reported on Friday the economy added 661,000 jobs in September, the fewest since the jobs recovery started in May, after creating 1.489 million in August.

The ISM survey’s measure of new orders for the services industry increased to a reading of 61.5 in September after dropping to 56.8 in August. But backlog orders and exports orders fell last month. The survey’s index of services industry employment rebounded to 51.8 from a reading of 47.9 in August.

Reporting By Lucia Mutikani; Editing by Chizu Nomiyama

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