Unlike Manufacturing, Service Sector Activity Holds Up In September

Daily Forex Fundamentals | Written by Wachovia Corporation | Oct 03 08 15:00 GMT |

Earlier this week, the Institute for Supply Management's manufacturing index plunged to recession territory. Today's report on the non-manufacturing sector (NMI), where the headline index remained relatively steady at 50.2, suggests that service sector activity is holding up much better than the manufacturing sector.
Activity Holds On

* The subcomponents supported the NMI. The employment index was the only subcomponent signaling contraction.
* The price index slipped again in September; energy prices in particular have moderated from recent highs. This downward trend in inflation should continue as growth here and abroad slows.

Outlook Still Challenging

* The forward looking new orders index climbed into expansionary territory last month.
* However, service sector activity should continue to slow as the overall economy struggles with transition of the correcting housing market, tighter credit conditions and a deteriorating labor market

Wachovia Corporation
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