By Maria Martinez

Service sector activity grew in September at broadly the same pace as in August, defying dim prospects amid rising interest rates and high inflation.

The Institute for Supply Management said Wednesday that its index of services activity fell only slightly to 56.7 in September from 56.9 in August, beating the 56.0 consensus forecast from economists polled by The Wall Street Journal.

The index, which is based on a survey to services providers across the U.S., signals activity among services providers expanded over the month as it came in above the 50.0 threshold that indicates growth.

The ISM indicator is at odds with another purchasing managers survey compiled by S&P Global, which signaled services activity contracted in September.

"Growth continues, at a slightly slower rate, for the services sector, which has expanded for all but two of the last 152 months," said Anthony Nieves, chair of the ISM Services Business Survey Committee. The services sector had a slight pullback in growth in September due to decreases in business activity and new orders, Mr. Nieves said.

The business activity index fell to 59.1 in September from 60.9 in August, suggesting that output expanded at a still solid clip. Demand growth decelerated, with the new orders index falling to 60.6 from 61.8 the prior month.

The employment index rose to 53.0 in September from 50.2 in August, in a sign that firms increased employment. "Employment continued to improve despite the restricted labor market," Mr. Nieves said.

The supplier delivery times index fell to 53.9 from 54.5. The indicator, coupled with a drop in the backlog of orders index, suggest that supply-chain bottlenecks are gradually improving.

"Based on comments from Business Survey Committee respondents, there have been improvements regarding supply-chain efficiency, operating capacity and materials availability; however, performance remains less than ideal," Mr. Nieves said.

Inflation pressures remained elevated, with the prices index falling to 68.7 from 71.5. "Due to supply-chain issues and inflation, we continue to limit purchases and/or start orders sooner than normal," said one of the respondents from the educational services sector.

Write to Maria Martinez at maria.martinez@wsj.com

(END) Dow Jones Newswires

October 05, 2022 10:35 ET (14:35 GMT)