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What September’s Services PMI Signals for Developed Markets

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Part 2
What September’s Services PMI Signals for Developed Markets PART 2 OF 11

The US Services PMI Weakened: Is the Business Climate Softening?

US services PMI in September

The September US services PMI (purchasing managers’ index) report indicates weaker improvement in the US (SPY)(QQQ)(VFINX) business climate. The US services PMI stood at 55.3 in September compared to 56.0 in August 2017. It beat the preliminary market expectations of 55.1.

The US Services PMI Weakened: Is the Business Climate Softening?

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The services PMI has shown a gradual improvement in performance since April 2017. However, it fell marginally in September. Let’s look at some of the key factors in the services PMI:

  • Production volume showed a weaker improvement in September 2017.
  • New order growth fell marginally from its 25-month high in August 2017, and export orders improved at a slower rate during September compared to August 2017.
  • Employment in the services sector declined to a three-month low.

Overall client demand remained positive in September. Input cost inflation picked up as the hurricanes increased the price of energy and raw materials. However, businesses are less optimistic about the short-term economic outlook, as there is significant uncertainty regarding tax reform in the economy.

Performance of various ETFs in September

The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500 Index, rose nearly 2% in September 2017. The iShares Russell 2000 ETF (IWM), which tracks the performance of the US small-capitalization sector, rose nearly 6.3% in September 2017.

In the next part of this series, we’ll analyze the performance of Germany’s services PMI in September 2017.

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