Two more measures of economic activity released Tuesday showed expansion during the month of September. But growth was held back by the macro themes of the moment: continuing supply shortages and weak employment gains.
Driving the news: The Institute for Supply Management’s Services PMI Index (which measures all non-manufacturing activity) increased — barely — to 61.9 from 61.7 in August. Consensus expectations were for the index to decline to 60.
- And the IHS Markit U.S. Services PMI Business Activity Index registered 54.9 in September. Though it's down slightly from 55.1 in August, it's higher than an earlier flash estimate — and any reading above 50 is an increase from the previous month.
Why it matters: It’s another sign that the economy’s rebounding, albeit slowly, from the Delta lull of July and August.
What's happening: Supplier delivery times slowed at an even faster rate than they did in August, while inventories declined and order backlogs grew — all evidence of the persistent supply chain challenges.
- Employment grew, but at a slower pace than overall business activity.
What to watch: Logjams or not, a pickup in growth usually translates to an uptick in prices.
- The ISM prices index jumped 2.1 percentage points from August to a reading of 77.5, reversing its decline the prior month. All 18 sectors included in the report noted higher raw materials prices in September.
- ISM's Manufacturing PMI released last week showed a similar movement on costs. Separately, the August Personal Consumption Expenditure price index (the inflation measure most watched by the Federal Reserve) grew by more than expected.
Go deeper: Emerging from the Delta slowdown