New data showed on Monday that the U.S. economy appears on track for another solid quarterly growth, while also pointing to potential “headwinds” in manufacturing and pricing pressures. .
S&P Global’s preliminary U.S. composite PMI, which tracks activity in both the services and manufacturing sectors, was 54.4 in September, down from 54.6 in August. Economists had expected the index to fall to 54.3.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the data shows the U.S. economy is on pace for “healthy” growth in the third quarter ending at the end of September. He said it shows.
“The continued strong expansion in production shown in September’s PMI is consistent with third-quarter GDP growth at a healthy 2.2% annualized rate,” Williamson said in a statement. “
Economists are predicting strong third-quarter growth for the U.S. economy after August’s better-than-expected retail sales. As of Sept. 18, Goldman Sachs’ economics team was tracking third-quarter GDP at 3%, and the Atlanta Fed’s GDPNow tool was pegging annual growth of 2.9%.
Last week, Federal Reserve Chairman Jerome Powell also cited the continued health of the economy as a reason for cutting interest rates and not delaying the move.
Chairman Powell said, “The U.S. economy is in good shape.” “We are growing at a solid pace. Inflation is falling. The labor market is at a good pace. We want to maintain this level.”
However, Monday’s S&P Global data showed some signs of slowing.
According to the services sector of S&P’s report, the index stood at 55.4 this month, down from 55.7 in August. Meanwhile, manufacturing activity remained sluggish, dropping from 47.9 in the previous month to 47, the lowest level in 15 months.
When these indices exceed 50, it represents expansion in this sector. A reading below 50 indicates shrinkage. Additionally, invoice prices are rising at the fastest pace in six months, which Williamson said could be a cause for concern on the inflation front.
“Early indicators for September show that the economy continues to grow at a solid pace, despite significant headwinds from weakening manufacturing and heightened political uncertainty,” Williamson said. “On the other hand, there are also indications that inflation will accelerate again.” The Fed cannot completely shift its focus from targeting inflation as it tries to keep the economy up. ”
Read more: Mobile phones, furniture and used cars: Prices are easing here as inflation cooldown continues
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The same survey’s Future Production Index, which measures optimism about economic output over the coming year, also fell to its lowest level since October 2022.
“Uncertainty surrounding the presidential election has dampened business confidence, demand, employment and investment, casting a shadow on many businesses’ outlook for the year ahead,” Williamson said.
A full view of the U.S. flag waving in the wind before the start of the NASCAR Xfinity Sonoma 250 at Sonoma Raceway on June 8, 2024 (Stan Zeto-USA TODAY Sports) (USA TODAY Sports via Reuters Connect/Reuters)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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