Disappointing services reading triggers fears of economic slowdown
A ‘Bulls & Bears’ panel discusses a new report on manufacturing levels and what this could mean for the economy as a whole.
The services sector expanded slower than expected in September, according to the ISM Non-Manufacturing Index released Thursday, amid fears of an impending economic recession that have plagued markets at the start of the fourth quarter.
The closely watched metric came in at 52.6, missing Dow Jones' economist expectations of 55.3 -- a healthy expansion rate, but down from August's 56.4.
Although the number remained above 50 -- anything below that signals contraction -- the pace of growth in the service sector is cooling, another sign the economy is slowing down. It was the worst reading since August 2016.
During a call with reporters, ISM officials blamed the stumble on the U.S.-China trade war, a shrinking labor pool and the overall direction of the global economy.
Following the report, and a slew of weak economic data this week, traders were pricing in a 92.5 percent chance of a third rate cut by the Federal Reserve at the end of October.
Thursday's disappointing data came one day after the worst manufacturing reading in more than a decade reignited fears that the U.S. economy is headed towards a recession.
The ISM September Manufacturing Index fell to 47.8 last month, the second straight month of contraction.