The U.S. services industry slowed modestly in September while employment surged and a measure of prices paid by businesses for inputs fell to more than a 1-1/2-year low, suggesting underlying strength in the economy despite rising interest rates, Reuters reported. That was underscored by other data on Wednesday showing private employers increased hiring last month. The trade deficit also narrowed in August to the lowest level in more than a year amid falling imports, prompting Goldman Sachs to boost its third-quarter gross domestic product tracking estimate by a full percentage point to a 1.9% annualized rate. The Institute for Supply Management (ISM) said its non-manufacturing PMI dipped to a reading of 56.7 last month from 56.9 in August. Economists polled by Reuters had forecast the non-manufacturing PMI would fall to 56.0. A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of U.S. economic activity. The U.S. central bank has hiked its policy rate from the near-zero level at the beginning of this year to the current range of 3.00% to 3.25%, and last month signaled more large increases were on the way this year.
