US business activity showed little change in September, with the services sector expanding at its slowest pace since February, and overall new order activity slumping to its lowest level this year, according to a survey published on Friday.
S&P Global said the flash composite US PMI index, which measures the manufacturing and services sectors, fell to a reading of 50.1 in September from the final reading for August of 50.2. The September result was almost above the 50 level that differentiates between expansion and contraction.
The survey's composite new orders index fell to its lowest since December at 47.7 from 49.2 last month, marking the second consecutive month of declining new orders. Input cost pressure also increased for the second month.
Job growth and consumer spending have held up well, and the rate of inflation has slowed significantly, prompting Fed officials on Thursday to upgrade their economic forecasts at a rate that suggests many of them now believe a recession can be avoided.
At the same time, the Fed left interest rates unchanged but indicated borrowing costs would remain high into next year, which could hamper economic growth. In fact, a number of indicators in the last month have pointed to slowing momentum, and Friday's PMI figures support that view.
"The PMI data for September added to concerns about the direction of demand conditions in the US economy after rising interest rates and high inflation," said Siân Jones, Chief Economist at S&P Global Market Intelligence, in a statement.
The services PMI slipped to an eight-month low of 50.2, slightly lower than the 50.6 reading expected by economists in a Reuters poll. The S&P manufacturing PMI rose slightly 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 weak environment, respondents to the manufacturing and services survey indicated that companies continued to add workers this month. Overall job growth was the strongest in four months, led by the services sector, but may be difficult to repeat in the coming months.
"Weak demand did not translate into overall job losses in September as the greater ability to find and retain workers led to faster job growth," Jones said.
