- S&P global composite Index for September 58.4 versus 50.4 preliminary. Last month 56.0
- Services PMI 58.8 versus 50.7 preliminary and 56.5 last month
Details
- Services PMI: 58.8. Prior 56.5. Strongest business activity growth since July 2021.
- Composite PMI: 58.4. Prior 56.0. Strongest expansion in overall business activity in over five years.
- New orders: Growth accelerated to its fastest pace in four-and-a-half years, led by domestic demand.
- Employment: Fastest service-sector job creation since June 2022.
- Input costs: Inflation accelerated to its highest rate since November 2022.
- Prices charged: Increased at the second-fastest pace in just over a year, behind only July.
- Backlogs: Increased for the 19th consecutive month, with the sharpest accumulation in almost four-and-a-half years.
- Business confidence: Improved to a one-year high.
US service-sector growth accelerated sharply in September, according to the supplied S&P Global release. The business activity index rose to 58.8 from 56.5 in August, marking a fourth consecutive monthly increase and the strongest expansion since July 2021.
The strength was broadening. All five service-sector categories reported higher activity for the first time in 10 months, with transport and storage returning to growth. Information and communication led the expansion. Strong domestic demand pushed new-order growth to a four-and-a-half-year high, encouraging companies to increase hiring. Even with those additional workers, unfinished business accumulated at a faster pace.
However, stronger activity came with renewed inflation pressure. Companies reported higher gasoline and transportation costs, alongside increased labor costs. Input cost inflation accelerated sharply after easing in August, and businesses raised their selling prices more quickly. The composite index, covering manufacturing and services, increased to 58.4 from 56.0, reinforcing the picture of stronger growth accompanied by rising costs.
Quick analysis: Stronger demand. More hiring. Higher prices. That combination gives the Fed more reason to remain cautious about easing policy. For traders, it could support the USD and Treasury yields if it reinforces expectations that interest rates will stay elevated. Equities face competing influences: stronger activity supports revenue prospects, while higher costs and yields could pressure margins and valuations. The key question is whether the renewed price pressure persists.
What this report measures: The Purchasing Managers’ Index (PMI) is a monthly business survey tracking changes in activity, orders, employment and prices. A seasonally adjusted reading above 50 signals expansion compared with the previous month; below 50 signals contraction. The composite combines manufacturing and services, helping traders assess broader economic momentum.
US stocks have rebounded at the open and the broader indices are higher with the S&P up 0.14% and the NASDAQ index up 0.60%. The Dow industrial average is still lower by -0.53%. The NASDAQ 100 is up 0.43%.
US yields are moving to the upside out the curve with the 10 year now up 2.76 basis points. The 2 year is down -2.4 basis points
This article was written by Greg Michalowski at investinglive.com.