US Services Sector “Shows Further Signs Of Struggling” In September

US Services Sector “Shows Further Signs Of Struggling” In September

After US Manufacturing’s mixed survey results in September (PMI weakest in 5 mos, ISM strongest in 4 mos), the Services surveys were expected to both show further weakness (but as usual they contradicted each other).

Markit US Services PMI fell from 55.1 to 54.9 in September (better than the 54.4 expected) – weakest since Dec 2020

ISM Services rose from 61.7 to 61.9 (smashing expectations of a drop to 59.9)

And those moves happening as ‘hard’ data’s trend has continued lower…

Source: Bloomberg

Take your pick…

While the surveys signal expansion (above 50), the slowest rise in new business for 13 months and labour shortages hampered output growth, as the upturn softened to the weakest in 2021 to date

Meanwhile, inflationary pressures remained historically elevated as input costs and output charges rose markedly:

The US Composite PMI fell to 55.0 in September – the weakest since last September.

Commenting on the latest survey results, Chris Williamson, Chief Business Economist at IHS Markit, said:

“The service sector showed further signs of struggling amid the COVID-19 Delta wave in September. While business activity is growing at a rate in line with the long-run average seen prior to the pandemic, this represents a marked downshifting from the spring and summer months.

High virus case numbers have not only subdued demand for many services, notably among consumers in the hospitality sector, the pandemic continues to hit the labor market both in terms of staff absences amid the spread of the virus and low labor market participation rates meaning it is difficult to fill vacancies.

However, Williamson does offer some hope…

“With COVID-19 cases numbers appearing to have peaked early in September, the situation in terms of demand and labor supply should start to improve as we head into the fourth quarter; a sentiment supported by business optimism rising in the service sector to the highest since June and an unprecedented strong build-up of back orders.”

All the ISM respondents’ comments are about supply chain issues…

But what happens to all that hope if the stummy deal continues to flail and debt ceiling talks stall even further? … Oh and remember, Fauci said ‘there is no Xmas for Murica’.

Tyler Durden
Tue, 10/05/2021 – 10:05

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