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U.S. Economic Activity Slows in September Amid Delta, Supply-Shortages -- IHS Markit

09/23/2021 | 10:21am EDT

By Xavier Fontdegloria

Growth in the U.S. private sector lost some momentum in September as concerns on the Covid-19 Delta variant and persistent supply-chain problems hit activity, according to a survey of purchasing managers.

The flash reading for the U.S. Composite Output Index decreased to 54.5 in September from 55.4 in August, data from IHS Markit showed Thursday.

The reading signals a solid expansion in output, but at the slowest pace for a year and far from the levels registered at the beginning of the summer. The index is based on data from the firm's PMI surveys for manufacturing and service sectors.

In September, growth in both the service and manufacturing sectors eased, but the slowdown was led by a cooling of demand in the service sector linked partly to the Delta variant spread, said Chris Williamson, chief business economist at IHS Markit.

"The pace of U.S. economic growth cooled further in September, having soared in the second quarter, reflecting a combination of peaking demand, supply-chain delays and labor shortages," he said.

IHS Markit's flash U.S. Services Business Activity Index dropped to 54.4 in September from 55.1 in August, a 14-month low and below the 54.9 level expected from economists polled by The Wall Street Journal.

Service providers saw a slower rise in new business, while employment levels were broadly unchanged, the report said. Capacity and costs pressures remained elevated.

For goods producers, supply constraints and material shortages showed no signs of easing and continued to constrain output growth.

The IHS Markit Flash Manufacturing PMI fell to 60.5 in September from 61.1 in August, a five-month low. Economists expected the indicator to come in at 61.7.

"While manufacturers have seen far more resilient demand, factories face growing problems in sourcing enough supplies and labor to meet orders," Mr. Williamson said.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

09-23-21 1020ET

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