Easing optimism in the outlook along with concern over the housing market pulled the services PMI to an 8-month low, ending September at 53.5 vs 52.9 for the mid-month flash and vs 54.8 in August. The report now describes the year-ahead outlook, weighed down by concerns over competition, as "subdued".
Yet current new orders regained their momentum in September with backlogs up for the first time since June. And hiring in the sample, in a positive indication for Friday's employment report, is the strongest right now in four years. The ongoing effects of tariffs helped feed a pick up in input costs with selling prices, in a result that is certain to catch the attention of Federal Reserve policy makers, the strongest in the 9-year history of this report.
These results together with Monday's manufacturing PMI, which came in at 55.6 make for a PMI composite of 53.9 vs 53.4 in September's flash and a final 55.0 in August.
In sum, today's services report is mixed with concern over housing and the dip in optimism offset by the rise in new orders and hiring. Watch for the ISM non-manufacturing report, which has been running hotter than this report, at 10:00 a.m. ET this morning.