S&P Global’s preliminary survey of purchasing managers released on Friday (23rd) showed that U.S. business activity shrank for the third consecutive month in September, although the rate of contraction moderated, with supply chain improving order growth and inflation. Further weakness eased concerns over a sharp contraction in business activity.
The U.S. Markit Manufacturing Purchasing Managers’ Index (PMI) hit a two-month high in September, and the service sector and composite PMI both hit a three-month high. Although the data were better than expected, this is not what the market is happy with, because it means that the United The Federal Reserve may raise interest rates more aggressively.
US September Markit PMI report:
- The initial value of the manufacturing PMI was reported at 51.8, slightly higher than market expectations of 51.1, and the previous value was 51.5, a 2-month high
- The initial value of the service PMI was reported at 49.2, higher than market expectations of 45.0, and the previous value was 43.7, a 3-month high
- The initial value of the composite PMI was reported at 49.3, the previous value was 44.6, a 3-month high
The composite PMI rose to 49.3 in September, up from 44.6 in August, revealing signs of a weaker and only marginal decline in corporate business activity, the slowest in three consecutive months of contraction. The overall decline in the manufacturing and service PMIs was slight, with a slightly slower pace of decline compared with August, while the services PMI declined at a slower pace than the manufacturing PMI.
Looking at the details of the data, new orders for enterprises resumed growth in September, rebounding from 47.4 in August to 51.2, and the manufacturing and service industries both experienced broad growth. Although this is the fastest growth rate since May this year, the recovery trend is not stable. Not obvious. However, several companies said inflationary pressures continued to weigh on consumer spending, which is still growing at a historically low pace, and new export orders continued to shrink, the second-fastest decline since May 2020.
The input price index fell to 66.8 in September from 70.5 in August, slowing for four straight months and the slowest pace of growth since early 2021, as growth in operating expenses for manufacturers and service providers slowed. The rate at which companies raised selling prices at the end of the third quarter also slowed as the cost burden grew more substantial increase.
In addition, while new orders only increased, cumulative orders also increased in September, but overall the increase was only slight, but in sharp contrast to the sharp decline in August. Manufacturers point out that there are still obstacles in processing orders due to disruptions in transportation and supply chains.
On the employment front, overall corporate payrolls rose further in September, albeit at a slower pace than in August. The modest rise in the labor force reflects the expansion of staffing levels in the manufacturing and service sectors.
Commenting on the data, S&P Global Chief Business Economist Chris Williamson said that while input cost inflation is cooling, it remains high by historical standards, and the survey report paints a picture of a slowdown in business activity. provide an overall picture of the economy struggling in a stagnant inflation environment.
Good economic data is bad news for the market, as it may allow the Fed to raise interest rates more aggressively. Before the deadline, the Dow Jones Industrial Average fell 407.57 points or nearly 1.4%, the Nasdaq Composite Index fell 212.95 points or nearly 2%, the S&P 500 Index fell nearly 1.9%, and the Philadelphia Semiconductor Index fell nearly 2.6%. U.S. 10-year Treasury yields continued to rise to 3.713 percent, while the dollar index also rose to 111.99.