September has seen prices rise at the fastest rate in six months, S&P Global said Monday (Sept. 23), attributing it to increasing input cost growth.
Wage growth in the service sector led to a 12-month high in input costs in that sector, the company said in a press release outlining flash Purchasing Managers Index (PMI) survey data.
“The survey’s price gauges meanwhile serve as a warning that, despite the PMI indicating a further deterioration of the hiring trend in September, the [Federal Open Market Committee (FOMC)] may need to move cautiously in implementing further rate cuts,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in the release.
The FOMC announced Wednesday (Sept. 18) that it decided to lower the target range for the federal funds rate by one-half percentage point to 4.75% to 5%, attributing the move to progress on inflation and the balance of risks.
The committee added in a statement announcing the decision that inflation remains somewhat elevated but has moved closer to the committee’s goal of 2%.
JPMorgan Chase CEO Jamie Dimon reportedly said before the FOMC’s decision that whether the cut amounted to 25 or 50 basis points, it would not be “earth-shattering” in terms of a soft landing.
Dimon said that while inflation has come down, it can come down more and it is unlikely to go away easily.
While the decision to cut interest rates for the first time in four years may eventually provide some “breathing room” for cash-strapped households, consumers may continue to trade down, juggle merchants and pull back on at least some discretionary expenses, PYMNTS reported Monday.
In its PMI survey data released Monday, S&P Global also found that business activity kept growing in September, with service sector growth more than making up for a modest decline in manufacturing sector output.
The month’s results signal sustained economic expansion throughout the third quarter, the company said in the release.
“The early survey indicators for September point to an economy that continues to grow at a solid pace, albeit with a weakened manufacturing sector and intensifying political uncertainty acting as substantial headwinds,” Williamson said in the release.
Order book growth moderated and business expectations for the year ahead deteriorated, reflecting uncertainty ahead of the presidential election, according to the release.