U.S. Services Indexes Diverge as Price Pressures Accelerate

September’s U.S. services readings diverged, while both surveys’ price gauges pointed to accelerating pressures that could complicate the outlook for inflation and monetary policy.

The S&P Global U.S. Services index climbed to 58.8 from 56.5 in August, reaching its highest level in five years. The Institute for Supply Management’s services index eased to 54.9 from 55.4, just below expectations of 55.0.

Information and communication recorded the sharpest expansion among the sectors covered by the S&P Global survey. Activity returned to growth in transport and storage. Growth also accelerated among consumer-facing businesses, industrials and healthcare, while financial services continued to expand.

The surveys’ price gauges pointed to intensifying inflation pressures. Firms’ input costs rose at their fastest pace in nearly four years, with higher fuel prices contributing in part. Selling-price growth also picked up.

Survey-based estimates pointed to U.S. economic growth of about 4% in the third quarter and 5% in September.

New orders and work backlogs rose faster, while business growth expectations recovered to a one-year high. The survey’s price gauges suggested inflation could remain above the Fed’s 2% target.