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September’s global flash PMI data brought out a different picture from August, indicating mixed performances across the US, Eurozone and UK.
The US showed signs of softening demand with excess inventory, but still found itself in expansion territory. Across the waters, the UK has been experiencing sluggish growth for four consecutive months as a result of slow demand and rising inflation.
The EU meanwhile demonstrated stronger services despite manufacturing dipping back into negative territory.
US PMI: Eased Demand, Cooling Inflation and Record Inventories
US business activity growth slowed for a second successive month in September, accompanied by a softening of demand growth. While growth was again seen across both manufacturing and service sectors, both categories reported weakened expansions, leading to slower hiring in both cases.
Tariffs were again widely cited as the main cause of sharply higher costs, where companies are worried that they could continue to pass on higher tariff driven costs onto consumers.
Despite the cooldown, the details painted an upbeat picture. Manufacturing remained within growth territory, despite its PMI easing to 52 from 53. Services, by contrast, lost a touch of steam, slipping to 53.9 from 54.5, suggesting demand may be easing. ⁽¹⁾
Selling prices rose at the slowest level since April, with goods inflation falling to its lowest level since January, with inventories indicating higher surpluses.
These signs could point to pressures on profit margins for retail companies and consumers, however, expectations for lower interest rates could continue to support business confidence. ⁽²⁾
Eurozone: Modest Growth with Stagnant Demand
The HCOB Flash Eurozone Composite PMI rose to 51.2 in September, exceeding its forecast of 51.1 and reaching a 16-month high, which signaled continuing expansion in the private sector.
The service sector contributed mostly to the growth, coming in at 51.4 and also exceeding its forecast of 50.5, reaching a 9-month high. Manufacturing, however, moved back into contraction territory, coming in at 49.5 and halting the growth made in August. Manufacturing new orders fell to their lowest level in six months. ⁽³⁾
Employment remained flat, ending a six-month streak of job creations as manufacturing saw continued job cuts while services added jobs. Input cost inflation softened, with manufacturing costs falling for the first time in three months. ⁽⁴⁾
Output prices rose modestly at the slowest pace since May, with Germany seeing a five-month high in charges and France experiencing a price drop. Supply chain performance declined as stocks of purchases and finished goods contributed to the decline, marking 39 months of slower decline but at a slower pace. ⁽⁵⁾
The strong service sector’s performance could support consumer driven stocks, while weak manufacturing performance could place pressure on industrials and the euro, especially with currencies tied to stronger manufacturing economies.
UK: Slowing Growth and Rising Costs
The S&P Global Flash UK PMI fell to 51, a 4-month low, indicating a slow pace in private sector growth. The services sector weakened to 51.9 while manufacturing dropped to its lowest level in six months, 45.4. New orders grew slightly, with export sales dropping at a faster rate since April, due to weak demand from the US and Europe. ⁽⁶⁾
Employment in the private sector continued to fall for twelve consecutive months due to hiring freezes and cost pressures. Input price inflation remains high, with services encountering high wage costs. Services price rose but manufacturing price inflation slowed due to competitive pressures. ⁽⁷⁾
The decline in manufacturing and weak export demand could add more bearish pressure to the pound, especially against the US dollar as demand for goods is improving.
