U.S. Service-Sector Activity Accelerated in September, ISM Says -- Update

By Sarah ChaneyFeaturesDow Jones Newswires

Service sector activity across the U.S. accelerated in September to a 12-year high, signaling resilience in the sector powering the bulk of the U.S. labor market despite recent hurricane activity.

The Institute for Supply Management on Wednesday said its index of nonmanufacturing activity -- tracking industries including health care, finance, agriculture and construction -- rose to 59.8 in September from 55.3 in August. This marks the highest reading since August 2005 when the index registered 61.3.

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Economists surveyed by The Wall Street Journal had expected a September reading of 55.2. A number above 50 indicates expansion.

"The surge in the ISM nonmanufacturing index is a clear sign that the economy is recovering quickly from any hurricane-related disruption and that the underlying pace of GDP growth remains strong," said Michael Pearce of Capital Economics in a note to clients.

Some respondents indicated that Hurricanes Harvey and Irma disrupted supply-chain activity, slowing deliveries, said Anthony Nieves, chairman of the ISM committee that oversees the index.

"However most of that was regional based," Mr. Nieves said.

The index for prices increased in September to 66.3, mainly due to an increase in fuel prices.

Other data have recently pointed to broadening strength in the economy. U.S. economic output grew at a 3.1% annual rate in the second quarter, slightly stronger than previously thought and marking the best growth in two years, the Commerce Department reported last week.

The ISM nonmanufacturing index covers a wide swath of business activity including retail trade, construction and services including health care.

A separate ISM gauge that tracks activity in the much-smaller manufacturing sector climbed to 60.8 last month from 58.8 in August, hitting its highest reading since May 2004.

Write to Sarah Chaney at sarah.chaney@wsj.com

(END) Dow Jones Newswires

October 04, 2017 11:41 ET (15:41 GMT)