US services sector cools in September, price pressures building - Reuters

U.S. activity in the services sector slowed in September, according to the latest purchasing managers’ index data, which showed a modest decline from the previous month. The composite index for non‑manufacturing fell to the low‑50s range, indicating that growth, while still above the 50‑point threshold that separates expansion from contraction, has lost momentum.

The slowdown was reflected across several sub‑indices. New orders for services decreased, suggesting weaker demand, while the employment component showed only marginal growth, pointing to a cautious approach by firms in hiring. Despite the overall deceleration, the sector continued to expand at a pace that remains above the contraction line.

At the same time, price pressures within the services sector intensified. The price index rose, indicating that firms are passing higher costs on to customers at a faster rate than in the prior month. This uptick in inflationary pressure comes amid broader concerns about rising input costs and the potential impact on consumer spending.

Analysts noted that the combination of a cooling services sector and heightened price pressures could influence the Federal Reserve’s assessment of inflation trends. The data suggest that while demand may be easing, cost pressures are not yet receding, a dynamic that could affect monetary‑policy decisions in the coming months.

Overall, the September figures depict a services economy that is still growing but at a slower pace, with inflationary forces becoming more pronounced. The mixed signals underscore the complexity of the current economic environment as policymakers and businesses navigate the balance between growth and price stability.