The prices index for services inputs rose to 59.4, indicating a faster pace of price growth compared to August's 57.3.

The unemployment rate is projected to remain steady at 4.2%, having increased from 3.4% in April 2023.

Recent data also reflects a modest increase in consumer spending and a reduced goods trade deficit, suggesting sustained economic momentum.

The Atlanta Federal Reserve estimates a 2.5% annualized growth rate for GDP in the third quarter, following a 3.0% growth rate in the second quarter.

In September, the U.S. services sector demonstrated robust growth, with the Institute for Supply Management reporting a nonmanufacturing purchasing managers' index (PMI) of 54.9, a notable increase from 51.5 in August.

This surge in service sector activity surpassed economists' expectations, who had predicted a more modest rise to 51.7.

The increase in the services PMI was primarily driven by a significant rise in new orders and business activity, with the new orders index climbing to 59.4 and the business activity index reaching 59.9.

The ISM's new orders measure also surged to 59.4, marking the highest level since February 2023, indicating strong demand.

Despite this growth, the employment measure within the services sector fell to 48.1, suggesting a contraction in job growth, which may raise concerns for the Federal Reserve.

The Federal Reserve is closely monitoring the labor market, especially as it has recently initiated a rate-easing cycle.

While businesses are experiencing higher input costs, this is not expected to significantly impact inflation, which has been on a decline.

In contrast, a separate ISM report indicated continued contraction in U.S. manufacturing activity, with the manufacturing PMI holding steady at 47.2 in September.