US services sector cools in September, price pressures building
SPY•The ISM services PMI eased to 54.9 in September from 55.4 in August, while its prices-paid index rose to 74.0, the highest since July 2022. Supplier deliveries slowed for a 22nd consecutive month.
1. Activity and prices
US services activity slowed in September, though the ISM nonmanufacturing PMI remained above the 50 mark that signals growth. The prices-paid index jumped to 74.0 from 72.6, as businesses reported increases in costs for copper, diesel, steel, petroleum-based products and memory products.
2. Supply chain pressures
The supplier deliveries index rose to 53.2 from 51.3, indicating slower deliveries for the 22nd consecutive month. Businesses cited fuel costs and tariffs as key supply-chain pressures, with reports of shortages in steel, fuel and memory components. New orders eased to 59.8 from 60.9, while order backlogs rose for an eighth straight month to their highest level since July 2022.
3. Employment and rates
The services employment index increased to 50.1 from 47.8, after contracting for two months. The article said the Federal Reserve raised its benchmark rate by 25 basis points last month to a range of 3.75%-4.00%; markets priced in a roughly 26% chance of another increase at the October meeting, down from about 71% the prior week.
