Industrial man man engineer wear uniform and helmet using laptop are checking system machine at factory. manager technician manufacturing. Workers industrial factory.

The private sector is marking its worst performance since February, according to data released last week by S&P Global. Data from both manufacturers and service providers “indicated muted demand conditions,” and “the service economy lost further momentum.”

New orders for services fell at their fastest so far this year. Manufacturing sales also fell, but the decline slowed slightly compared to the previous month. Meanwhile, cost pressures remain elevated due to high interest rates and inflation.

The S&P Global Flash U.S. PMI Composite Output Index was 50.1, representing a 7-month low. The Flash U.S. Services Business Activity Index hit an 8-month low at 50.2. Both the Flash U.S. Manufacturing Output Index (49.7) and the Flash U.S. Manufacturing PMI (48.9) were up slightly from August. All four numbers hovered around 50, which is the dividing line between expansion (above 50) and contraction (below 50).

Siân Jones, Principal Economist at S&P Global Market Intelligence said in the press release: “PMI data for September added to concerns regarding the trajectory of demand conditions in the US economy following interest rate hikes and elevated inflation. Although the overall Output Index remained above the 50.0 mark, it was only fractionally so, with a broad stagnation in total activity signaled for the second month running. The service sector lost further momentum, with the contraction in new orders gaining speed.

In contrast to the sales conditions, U.S. businesses created jobs at the fastest pace since May. S&P Global reports that companies had an easier time filling vacancies, which helped ease work backlogs.

“Subdued demand did not translate into overall job losses in September as a greater ability to find and retain employees led to a quicker rise in employment growth. That said, the boost to hiring from rising candidate availability may not be sustained amid evidence of burgeoning spare capacity and dwindling backlogs which have previously supported workloads,” Jones continued. “Inflationary pressures remained marked, as costs rose at a faster pace again. Higher fuel costs following recent increases in oil prices, alongside greater wage bills, pushed operating expenses up. Weak demand nonetheless placed a barrier to firms’ ability to pass on greater costs to clients, with prices charged inflation unchanged on the month.”