Tempe AZ, October 5, 2005--Growth at service companies slowed more than expected in September as Hurricanes Katrina and Rita shut down businesses along the Gulf Coast and drove up energy prices to records.
The Institute for Supply Management's measure of financial services, retail trade and other non-manufacturing businesses fell to 53.3 from 65 in August, the fastest pace in 16 months. Economists expected a reading of 60, according to the median of 63 forecasts in a Bloomberg survey. A reading above 50 indicates expansion.
Gulf Coast operations at companies such as mobile phone provider Cingular Wireless were disrupted by the hurricanes, and the record gasoline prices that followed the storms curbed consumer spending across the nation. San Francisco Federal Reserve Bank President Janet Yellen said last week that the U.S. economy will see a ``significant dip'' in growth.
``There were massive disruptions to retailing, energy transmission and shipping in the South last month,'' said Roger Kubarych, a senior economic adviser at HVB America Inc. in New York, before the report. ``Energy prices also serve as a deterrent for people to go shopping.''
