U.S. business activity nears stand-still in September, survey says
2023.09.22 10:35
© Reuters. People eat at a mostly empty restaurant with tables on the street, in the financial district during the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., September 9, 2020. REUTERS/Carlo Allegri
NEW YORK (Reuters) – U.S. business activity showed little change in September, with the vast services sector essentially idling at the slowest pace since February, and overall new order activity slipping to the lowest level this year, a survey published Friday showed.
S&P Global said its flash U.S. Composite PMI index, which tracks the manufacturing and service sectors, dipped to a reading of 50.1 in September from a final reading for August of 50.2. September’s result was negligibly above the 50 level that separates expansion and contraction.
The survey’s composite new orders index slid to the lowest since December at 47.7 from 49.2 last month, marking the second straight month of declining new business. Input cost pressures ticked higher for a second month as well.
The U.S. economy so far this year has defied projections for sliding into a recession that most economists had expected would be triggered by the Federal Reserve’s aggressive interest rate increases aimed at quelling inflation. Job growth and consumer spending have all held up, and the pace of inflation has slowed markedly, leading Fed officials on Wednesday to upgrade their economic forecasts to a degree that suggests many of them now believe a recession may be averted altogether.
At the same time, the Fed left interest rates unchanged but indicated borrowing costs will remain high well into next year, which could hamper the economy’s progress from here. Indeed, a range of indicators in the last month have signaled momentum is slowing, and Friday’s PMI figures buttressed that view.
“PMI data for September added to concerns regarding the trajectory of demand conditions in the U.S. economy following interest rate hikes and elevated inflation,” Siân Jones, Principal Economist at S&P Global Market Intelligence, said in a statement.
The survey’s services PMI edged down to an eight-month low of 50.2, fractionally lower than the reading of 50.6 expected by economists in a Reuters poll. S&P’s manufacturing PMI ticked higher to 48.9 from 47.9 in August but was still the fifth straight month of contraction. Economists had forecast a manufacturing PMI of 48.0.
Despite the softening environment, both manufacturing and services survey respondents indicated companies kept adding to staff levels this month. Overall employment growth was the strongest in four months, led by the services sector, but that may prove difficult to replicate in the months ahead.
“Subdued demand did not translate into overall job losses in September as a greater ability to find and retain employees led to a quicker rise in employment growth,” Jones said. “That said, the boost to hiring from rising candidate availability may not be sustained amid evidence of burgeoning spare capacity and dwindling backlogs which have previously supported workloads.”
