The U.S. services sector expanded at a slightly quicker pace in September as the non-manufacturing business activity composite index was 55.1 in the month, compared to 53.7 in August, on a seasonally adjusted basis, the Institute for Supply Management reported Wednesday.

Economists polled by Thomson Reuters had expected a 53.2 level.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.

The prices paid index, closely watched for signs of inflation, rose to 68.1 from 64.3.

The employment index decreased to 51.1 from 53.8.

The business activity/production index grew to 59.9 from 55.6, the new orders index was at 57.7, up from 53.7; backlog of orders decreased to 48.0 from 50.5; new export orders slid to 50.5 from 52.0; inventories fell to 48.5 from 52.5; inventory sentiment dipped to 65.0 from 67.0; the supplier deliveries index remained at 51.5; and imports climbed to 50.0 from 49.5.

Members' general comments on business in the month included:

"Business remains steady - optimistic for good fourth quarter." (Information)

"Drought is putting pressure on food cost; tourism slowdown over the summer." (Arts, Entertainment & Recreation)

"Things feel like the economy is moving. More new small business; unemployment declining; stock market up." (Health Care & Social Assistance)

"Economic outlook is improving, but company is putting a major effort into more cost reductions and reorganization, resulting in more collaboration between procurement and our internal customers." (Professional, Scientific & Technical Services)

"The general slowdown which began in March showed some reversal in August." (Wholesale Trade)

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