US PMI Declines in September but Manufacturing Sector Advances

The IHS Markit Flash U.S. Composite PMI Output Index posted 54.4 at the end of the third quarter (Q3) of 2020, down from 54.6 in August, adjusted for seasonal factors.

However, the index’s quarterly average was the highest since the opening three months of 2019.

The seasonally adjusted IHS Markit Flash U.S. Services PMI Business Activity Index registered 54.6 in September, down slightly from 55.0 in August

Meanwhile, U.S. manufacturers indicated the fastest improvement in operating conditions since January 2019, as the IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) which posted 53.5 in September, up from 53.1 last month.

“US businesses reported a solid end to the third quarter, with demand growing at a steepening rate to fuel a further recovery of output and employment.”

“The survey data, therefore, add to signs that the economy will have enjoyed a solid rebound in the third quarter after the second-quarter slump.”

“The question now turns to whether the economy’s strong performance can be sustained into the fourth quarter. Covid-19 infection rates remain a major concern and social distancing measures continue to act as a dampener on the overall pace of expansion, notably in consumer-facing services. Uncertainty regarding the presidential election has also intensified, cooling business optimism about the year ahead. Risks, therefore, seem tilted to the downside for the coming months, as businesses await clarity with respect to both the path of the pandemic and the election.”