US services sector activity slows in September; price pressures mount
- ISM non-manufacturing PMI slips to 54.9 as demand outpaces supply
- Input costs for businesses skyrocket to 74.0, signaling persistent inflation
- Middle East turmoil stoking energy price hikes and transit bottlenecks
- Federal Reserve rate hikes likely back on the table for December
Brief Summary
The US services sector, the engine room of the economy, hit a speed bump in September as supply chains buckled under the weight of unrelenting demand. While the sector is still technically growing, the cooling PMI indicates that the friction is mounting. The real story here is the cost of doing business, which is surging as companies pay more for inputs, setting the stage for these expenses to inevitably land on your receipt.
Why This Matters
Expect your wallet to feel the pinch as businesses pass these mounting input costs directly to you. With energy prices climbing due to global instability and supply chains failing to keep pace with demand, the 'transitory' inflation narrative is officially dead. This economic pressure is almost certain to force the Federal Reserve to keep interest rates higher for longer, meaning borrowing money for a house, car, or credit card debt is going to stay expensive well into the coming year.