Prior was 55.7 (best in two years)Prelim was 55.4Composite 54.0 vs 54.4 prelim
Chris Williamson, Chief Business Economist at S&P Global
Market Intelligence
“US service sector businesses reported a strong end to the third
quarter, with output continuing to grow at one of the fastest rates seen
over the past two-and-a-half years. After GDP rose at a 3.0% rate in the
second quarter, a similar strong performance looks likely in the three
months to September.
“Encouragingly, inflows of new business in the service sector grew at a
rate only marginally shy of August’s 27-month high. Lower interest rates
have already been reported by survey contributors as having buoyed
demand, notably for financial services which, alongside healthcare,
remains an especially strong performing sector.
“Companies have become increasingly concerned about the outlook,
however, with business confidence slumping in September amid
uncertainty caused by the upcoming election as well as perceptions of
rising recession risks.
“The upturn has also become increasingly uneven, with growth wholly
dependent on the service sector as manufacturing has slipped deeper
into a decline in September. This factory malaise is showing some signs
of spilling over to the service sector, subduing growth in particular for
industrial services.
“It therefore remains to be seen how the Presidential Election will
affect growth, and the extent to which lower interest rates might help
revive struggling sectors such as industrial goods and services. Clearly
there are both upside and downside risks to growth.
“Meanwhile, the inflation signals from the survey point to reviving price
pressures, principally linked to stubbornly elevated wage growth,
which could temper the Fed’s enthusiasm for further aggressive rate
cutting.”
This article was written by Adam Button at www.forexlive.com.
