US business activity softened in September, with PMI Composite falling from 54.6 to 53.6. Manufacturing slipped from 53.0 to 52.0, while services eased from 54.5 to 53.9. Despite the slowdown, the surveys still indicate the economy expanded at a solid 2.2% annualized pace in Q3.
Chris Williamson of S&P Global noted that growth has cooled since peaking in July, with hiring momentum also weakening. Firms reported softer demand conditions, limiting their ability to raise prices.
Tariffs continued to push up input costs across manufacturing and services, but fewer companies were able to pass those costs on, hinting at “squeezed margins but boding well for inflation to moderate”..
The survey suggested consumer inflation will remain above the Fed’s 2% target in the near term, though signs of inventory accumulation in manufacturing could further dampen price pressures ahead.
