After August's surprising tumble in Markit's PMIs (Services much more so than Manufacturing), analysts expected that trend to continue in preliminary September data (albeit at a far more gradual rates), all of which fits with the ongoing trend of collapse in actual macro-economic data relative to over-optimistic expectations.
The actual prints were worse than expected:
- Markit US Manufacturing fell to 60.5in early Sept from 61.1 in August (below the 61.0 expected)
- Markit US Services fell to 54.4in early Sept from 55.1 in August (below the 54.9 expected) -a 14-month low
On the price front, input costs rose at a sharper pace during September.
The rate of cost inflation was the quickest for four months, and the second-highest on record, as supply chain disruptions and material shortages pushed prices and transportation costs up.
Output charges continued to increase markedly,continuing to rise at a pace far outstripping anything seen in the survey’s history prior to May, as firms sought to pass on higher costs to clients where possible.
The flash US Composite PMI tumbled to 54.5 (below expectations) - its weakest in 12 months...
Commenting on the PMI data,Chris Williamson, Chief Business Economist at IHS Markit,said:
“The pace of US economic growth cooled further in September, having soared in the second quarter, reflecting a combination of peaking demand, supply chain delays and labour shortages.
“The slowdown was led by a cooling of demand in the service sector, linked in part to the Delta variant spread. However, while manufacturers have seen far more resilient demand, factories face growing problems in sourcing enough supplies and labour to meet orders. Supply chain delays show no signs of easing, with another near-record lengthening of delivery times in September. Hence factory output growth also weakened and order book backlogs rose at a record pace in September.
“The upshot is yet another month of sharply rising prices charged for goods and services as demand outpaces supply, and higher costs are passed on to customers.”
So economic growth is cooling but prices are still soaring...
