- Prior was 55.7 (best in two years)
- Manufacturing 47.0 vs 48.5 expected
- Prior manufacturing 47.9
- Composite 54.4 vs 54.6 prior
- average prices
charged for goods and services rising at the fastest rate
since March - Rates of selling price inflation moved up to six-month highs
in both manufacturing and services, in both cases running
above pre-pandemic long-run averages to point to
elevated rates of increase - A one-
year high rate of cost inflation in the service sector was
often linked to the need to raise pay rates for staff - Manufacturing input cost growth cooled to a
six-month low - Optimism about output in the year ahead deteriorated
sharply, the survey’s future output index falling to its lowest
since October 2022 and the second lowest seen this side
of the pandemic - Employment fell for a second month running in September
and has now fallen in four of the past six months - Full report
The manufacturing and services sides of the economy are certainly moving in opposite directions. The falling optimism is possibly related to the election but that’s tough to quantify, in particular because manufacturing sentiment held up.
Commenting on the data, Chris Williamson, Chief Business
Economist at S&P Global Market Intelligence said:
“The early survey indicators for September point to an
economy that continues to grow at a solid pace, albeit with
a weakened manufacturing sector and intensifying political
uncertainty acting as substantial headwinds. A
reacceleration of inflation is meanwhile also signalled,
suggesting the Fed cannot totally shift its focus away from
its inflation target as it seeks to sustain the economic
upturn.
“The sustained robust expansion of output signaled by the
PMI in September is consistent with a healthy annualized
rate of GDP growth of 2.2% in the third quarter. But 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.
“Business sentiment, demand, hiring and investment are
being subdued by uncertainty surrounding the Presidential
Election, casting a shadow over the outlook for the year
ahead at many firms.
“The survey’s price gauges meanwhile serve as a warning that, despite the PMI indicating a further deterioration of
the hiring trend in September, the FOMC may need to
move cautiously in implementing further rate cuts. Prices
charged for goods and services are both rising at the
fastest rates for six months, with input costs in the services
sector – a major component of which is wages and salaries
– rising at the fastest rate for a year.”
The Fed and the bond market have moved beyond inflation. Are they missing something?