The Numbers

According to recent surveys by S&P, the U.S. economy experienced a loss of momentum in the late summer period. This can be attributed to the impact of rising interest rates and persistent inflation.

The S&P flash U.S. services-sector index dropped to its lowest point in eight months, reaching 50.2 compared to the previous month’s 50.5. It is important to note that a significant portion of the American workforce is employed in the service sector, including industries like healthcare, retail, and hospitality.

On the other hand, the S&P U.S. manufacturing-sector index saw a slight increase from 47.9 to 48.9, although it still remained in negative territory.

It is worth mentioning that the S&P Global surveys are among the first indicators released each month to assess the health of the economy. A number above 50 indicates expansion, while a number below 50 suggests contraction.

It should be noted, however, that the S&P surveys consistently depict a weaker economy compared to other measures of U.S. growth.

Key Details

S&P highlighted that new orders, which serve as an indicator of future demand, declined at the “strongest pace this year.”

On a more positive note, businesses were actively hiring, indicating a relatively stable demand for their products and services.

Executives acknowledged a slight intensification of inflation, partly attributed to higher energy prices. Nevertheless, inflation was considerably lower compared to the previous year.

Manufacturers expressed a slightly more optimistic outlook.

The Big Picture

The expansive service sector has been the driving force behind the ongoing economic expansion, preventing the United States from falling into recession.

In contrast, manufacturers have struggled to keep pace, and the recent strike by unionized auto workers may further impede their progress.

While the S&P indicators suggest worsening conditions, other reports suggest that the economy is still on solid ground.

Looking Ahead

The survey results have raised concerns regarding the future trajectory of demand conditions in the U.S. economy, particularly in light of interest rate hikes and elevated inflation. Siân Jones, Principal Economist at S&P Global Market Intelligence, expressed these concerns.

Market Reaction

In Thursday’s trading session, both the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) exhibited mixed performance.

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