U.S. Business Activity Suffers Small Loss of Momentum in September, PMI Shows
Economy growing at solid pace, but facing headwinds from manufacturing and uncertainty over election
The numbers: U.S. business activity remained robust, but there was a small loss of momentum in September, a survey showed Monday.
The first reading of the S&P U.S. services index of purchasing managers edged down to 54.4 in September, a two-month low, from 55.7 in the prior month. Numbers above 50 signal growth.
The preliminary U.S. manufacturing PMI fell to 47 from 47.9. That was a 15-month low.
Key details: Optimism about the outlook in the year ahead deteriorated sharply to the lowest level since October 2022, in part due to uncertainty regarding the presidential election, S&P said.
S&P also released a composite index, which had its strongest quarter since the first three months of 2022.
The September survey also found that average prices for goods and services rose at their fastest rates since March. That's the first acceleration for four months.
Big picture: The U.S. consumer has been resilient, keeping economic growth above its longer-run trend.
Scott Anderson, chief U.S. economist at BMO Capital Markets, said there are signs that downside risks to the economy are diminishing, even before the Federal Reserve's aggressive half-point rate cut.
He pointed to the drop in jobless claims and the runup in U.S. equity prices.
What S&P said: "There are some warning lights flashing, notably in terms of the dependence on the service sector for growth, as manufacturing remained in decline, and the worrying drop in business confidence," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The reacceleration of inflation suggests the Fed "cannot shift its focus away from its inflation target as it seeks to sustain the economic upturn," he added.
Source: Marketwatch
