| Actual | Previous | |
|---|---|---|
| Composite Index | 54.0 | 54.6 |
| Services Index | 55.2 | 55.7 |
Highlights
The US composite final fell to 54.0, lower than in August (54.6) and the flash estimate (54.4). This indicates the economy is expanding.
The US services PMI fell to 55.2, lower than in August (55.7) and the flash estimate (55.4). This suggests the expansion of the service economy for the 20th month in a row. This was likely due to an increase in new work and the recent reduction in interest rates which boosted demand.
Despite the expansion of new business both abroad and domestically, confidence in the year ahead dropped sharply in September. It was the lowest since October 2022.
Employment also dropped for the second month running, albeit only marginally with some companies lowering staffing levels in a bid to save cost.
Input prices increased rapidly in September. Higher input costs were linked to salary pressures. Alongside higher staff pay, rising prices for manufactured goods led some companies to increase their selling prices. Input costs and selling prices were both above their respective pre-pandemic averages.
The reduction in staffing levels meant outstanding business accumulated during September allowing backlogs of work to rise for the third time in the past four months.
The US RPI stands at plus 20 and RPI-P stands at plus 26. Economic activity is modestly outperforming market forecasts.
The US services PMI fell to 55.2, lower than in August (55.7) and the flash estimate (55.4). This suggests the expansion of the service economy for the 20th month in a row. This was likely due to an increase in new work and the recent reduction in interest rates which boosted demand.
Despite the expansion of new business both abroad and domestically, confidence in the year ahead dropped sharply in September. It was the lowest since October 2022.
Employment also dropped for the second month running, albeit only marginally with some companies lowering staffing levels in a bid to save cost.
Input prices increased rapidly in September. Higher input costs were linked to salary pressures. Alongside higher staff pay, rising prices for manufactured goods led some companies to increase their selling prices. Input costs and selling prices were both above their respective pre-pandemic averages.
The reduction in staffing levels meant outstanding business accumulated during September allowing backlogs of work to rise for the third time in the past four months.
The US RPI stands at plus 20 and RPI-P stands at plus 26. Economic activity is modestly outperforming market forecasts.
Definition
US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.
Description
Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally 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. The PMI data are also used by many Central Banks to help make interest rate decisions.
The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.
The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.
