Investing.com – Activity in the U.S. services sector rose more than expected in September, boosting optimism over the state of the U.S. economy, according to preliminary data released on Tuesday.
In a report, market research group Markit said that its flash services purchasing managers’ index (PMI) rose to 51.9 in September, from the prior month’s reading of 51.0.
Analysts had expected an smaller increase to 51.1 this month.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
Though Markit noted that this was the sharpest rise in activity since April, new orders and employment increased at slower rates, while inflationary pressure eased.
Markit chief economist Chris Williamson considered that the data sent mixed signals.
"A drop in optimism about the year ahead to a near post-crisis low meanwhile cast a shadow over the outlook," he warned.
Williamson pointed out that the activity was subdued and combined with the manufacturing survey pointed to growth of just 1% in the third quarter.
He further indicated that the slowdown in hiring was consistent with an increase of 120,000 nonfarm payrolls in September.
“The slowdown in hiring is perhaps a natural symptom of the economy reaching full employment, but companies also reported a reduced appetite to hire and job losses due to weaker inflows of new business and worries about the outlook,” Williamson concluded.
In an immediate reaction, EUR/USD traded at 1.1217 from 1.1206 prior to the release, GBP/USD was at 1.2978 from 1.2962 earlier, while USD/JPY was at 100.38 compared to 100.30 previously.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 95.41, compared to 95.50 ahead of the report.
Meanwhile, U.S. stocks were trading slightly higher after the open. The Dow 30 gained 24 points or 0.13%, the S&P 500 advanced 3 points or 0.13%, while the tech-heavy Nasdaq Composite traded up 16 points or 0.30%.
Elsewhere, in the commodities market, gold futures traded at $1,330.50 a troy ounce, compared to $1,332.45 ahead of the data, while crude oil was unchanged at $44.81.