September ISM services PMI falls to 54.9 as prices-paid subindex jumps to 74.0, stoking December Fed-hike expectations
What happened
The Institute for Supply Management's services PMI fell to 54.9 in September from 55.4 in August, roughly in line with the ~55 consensus — still expansionary (above 50) and consistent with solid Q3 growth driven by consumer spending and AI-infrastructure investment. The inflation detail was the surprise: the prices-paid subindex jumped to 74.0 from 72.6, while new orders eased to 59.8 from 60.9 and supplier deliveries slowed for a 22nd straight month (53.2 vs 51.3). The survey blamed strained supply chains, the U.S.-Israel war with Iran raising energy costs, and record diesel prices; combined with the prior week's ISM manufacturing read, economists said the price data supports expectations of a Fed rate hike in December.
Why it matters & what’s next are part of Pro, along with the audio summary.
Start your free 14-day trialWho’s affected
- Broad U.S. equities / rate-sensitive sectors (utilities, REITs, small caps, homebuilders) — exposed via the 10-year yield, which was hovering near 24-year highs; growth and tech names (Nasdaq-heavy) that have been trading off rate expectations; transportation and agricultural/consumer names exposed to record-high diesel prices cited in the survey.