U.S. Growth Stays Broadly Stable But Manufacturing Worsens Again, Surveys Show

By Joshua Kirby

The U.S. economy lost a little pace this month, with the manufacturing sector weakening more than expected, according to business surveys released Monday.

The S&P Global Flash U.S. Composite PMI - which gauges activity in the manufacturing and services sectors - dropped slightly to 54.4 in September from 54.6 in August. Growth in the services sector slowed only a little - to 55.4 from 55.7 in August - in line with the expectations of economists polled by The Wall Street Journal. But the index for the factory sector fell to its lowest level in more than a year, reaching 47.0 compared with 47.9 a month earlier, a worse reading than projected.

New orders were the weakest component of manufacturing this month, suggesting demand for U.S. factory goods is hobbling. Employment meanwhile fell at its fastest rate since June 2020, during the Covid-19 pandemic.

"There are some warning lights flashing, notably in terms of the dependence on the service sector for growth," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Companies also set out an increasingly bleak view of the months ahead, with the index's future-output gauge dropping to its weakest in just under two years. Uncertainty ahead of the presidential elections in November is weighing on sentiment, S&P Global said.

It comes after the Federal Reserve last week cut rates by half a percentage point in a bid to stimulate investment and demand amid signs of cooling growth. That offered some hope for manufacturers that lower borrowing costs will help revive investment.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

September 23, 2024 10:27 ET (14:27 GMT)

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