US flash PMI shows slower employment and rising inflation in September

Data from S&P Global showed continued growth disparities between the manufacturing and services sectors in September.

• Flash production September PMI: 47.0 (forecast 48.6, previous reading down from 48.0 to 47.9)
• Flash services September PMI: 55.4 (55.3 forecast, 55.7 previous)

Manufacturer of goods the manufacturing sector it contracted further from 48.6 to 47.0, marking the third consecutive decline steepest deterioration since June 2023.

New orders – which fell at the fastest pace since December 2022 – were the biggest negative contributor, followed by employment, which fell at a pace not seen since the pandemic in June 2020.

Meanwhile, the the service sector extended by another month but decelerated slightly from 55.7 to 55.4.

The report noted that economic uncertainty and demand around the US presidential electionwhich led to deteriorating confidence and slower employment in the service industry.

Link to S&P Global US Flash Composite PMI for September

The composite PMI report showed average prices for goods and services rose at the fastest pace since March, with sales price inflation rising to six-month highs for both industries as input costs rose.

Chris Williamson, chief business economist at S&P Global Market Intelligence, also noted:

“Despite the fact that the PMI indicates a further deterioration in the employment trend in September, The FOMC may need to move cautiously in implementing further rate cuts.

Prices charged for goods and services are both rising at the fastest pace for six months, with input costs in the service sector – a major component of which is wages and salaries – rising at the fastest pace for a year.”

Market reactions

US Dollar vs. Major Currencies: 5 min

USD chart overlay against major currencies by TradingView

The US dollar, which has been trending lower since the London session, briefly rallied against safe-havens like the JPY and CHF, as well as popular pairs like the EUR, AUD and NZD after the release. A possible factor? Growth continues in the services sector.

But it didn’t take long for markets to factor in the weaker employment outlook, stubbornly high prices and uncertainty surrounding the upcoming presidential election. The greenback extended its losses, hitting fresh intraday lows around the London close, before stabilizing or making a slight recovery against its main rivals.

By the end of the day, the dollar was in the red everywhere, with the weaker euro being the only exception.