Trouble in services, an unwelcome theme from the European PMI's released earlier today, combined with extending contraction in manufacturing, a global theme in general, pulled down the US PMI composite to 50.4, roughly at breakeven 50 to indicate very little change in the pace of month-over-month economic activity this month. Survey respondents are blaming high interest rates and inflationary pressures for the trouble.

Services are holding above 50 but at 51.0 are down 1.3 points and at their weakest pace since February. This sample"reined in" hiring in the month which may have forecasters marking down estimates for the August employment report. Manufacturing fell a tangible 2 points from July to 47.0 to indicate unquestionable contraction for the sample. A steepening decrease in new orders is this sector's unwanted highlight.

Costs are also a negative in today's report with inputs reaccelerating on wage bills and higher raw material as well as fuel prices. Yet pass through to customers is slowing this month, capped in part by customer requests for discounts.

These results point to deterioration in the coming ISM reports and may be seized upon by the pessimists that the US, again due to high interest rates, is indeed edging toward for recession.

Services have held the 50 column the last six reports with the consensus for August at 52.0 versus July's 52.3. Manufacturing, at 49.0 in July, is expected to be little changed at 48.8.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.