- Prior was 55.7 (best in two years)
- Prelim was 55.4
- Composite 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."
