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Illustration: Shoshana Gordon/Axios

Friday brought us a pile of fresh data to pick through for signs of the economy’s rebound from the Delta-induced slowdown.

Why it matters: One important indicator of economic activity surprised to the upside. But continuing supply chain problems and so-so August consumer spending may still put economists’ Q3 growth targets (which have already been revised down) out of reach.

Driving the news: The Institute for Supply Management’s Manufacturing PMI index grew to 61.1 in September, from 59.9, indicating an expansion in the overall economy.

  • That’s a good sign. Economists had estimated the index would contract slightly, to 59.5.

The big picture: “This gives the overall impression of an economy that's at least stabilizing, if not re-accelerating,” Steve Chiavarone, portfolio manager and equity strategist at Federated Hermes, tells Axios.

  • He adds that Federated Hermes’ internal reopening index — which tracks activities like office key-card swipes and OpenTable reservation activity — has also been moving higher over the last couple of weeks as new COVID cases decline.

Yes, but: The ISM release showed that employment grew little in the sector, amid stressed transportation networks and slower delivery times.

The intrigue: While ISM overall gave reason for optimism, Friday’s data dump also included consumer spending numbers for August — which, when adjusted for inflation, show a stagnant second quarter for that engine of GDP.

  • Spending grew 0.8% compared with July, according to the Bureau of Economic Analysis.
  • But real, inflation-adjusted spending was only up 0.4%. And after a big downward revision for July — to negative 0.5% — the first two months of the third quarter are basically a wash.
  • “The data make it pretty clear that the third-quarter consumer spending numbers are going to be very disappointing when it comes to GDP,” says Luke Tilley, chief economist at Wilmington Trust.

Our thought bubble: The well-documented supply chain problems are no doubt holding back both consumer spending (not enough goods on the shelves) and manufacturing (there’s still a big order backlog).

The bottom line: "[Friday's] releases were more or less in line with the narrative that the economy and consumer are strong, but the pressures in the supply chain are having a significant, but not game-changing, effect in limiting supply and capping growth,” Matt Peron, director of research at Janus Henderson Investors, wrote in a research note.

Go deeper

Higher prices are the new norm, with no end in sight

Illustration: Aïda Amer/Axios

Companies are making money at record rates thanks in part to customers who are willing to pay higher prices.

Why it matters: In order to keeping that corporate profitability streak going, shoppers should expect sticker prices to stay high or become more expensive well into 2022. Fewer promotions and shallower discounts will also become the norm as inventory levels remain low.

Tina Reed, author of Vitals
Oct 26, 2021 - Health

Supply chain shortages' latest victim: crutches

Illustration: Sarah Grillo/Axios

An aluminum shortage tied to the global supply chain crunch has led to a new medical supply shortage: crutches.

Why it matters: The latest example of pandemic-spurred medical supply chain problems could become a much bigger problem in the next couple of months which are typically the busiest time of the year for orthopedic surgeries.

  • That's because many people try to squeeze their surgeries before the end of the year before their deductibles reset in January.

The startup that wants to disrupt big internet providers

Maura Losch/Axios

A new startup backed by funding from AOL founder Steve Case and Laurene Powell Jobs wants to break up broadband monopolies across the country.

Why it matters: Internet access has been crucial during the pandemic, but it's not ubiquitous, and it can be both slow and unaffordable in swaths of the country.