The new "headwind" of the US economy is approaching!

The latest data shows that the U.S. economy seems to be moving towards another strong quarter of growth, but also points out potential "headwinds" in manufacturing and price pressures.

The S&P Global U.S. Composite PMI for September was 54.4, lower than August's 54.6, with economists expecting the index to drop to 54.3.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that the data indicates the U.S. economy is moving towards "healthy" growth in the third quarter.

In a released statement, he said, "The PMI signaled sustained strong output expansion in September, consistent with the third-quarter GDP growth rate of 2.2%."

Following better-than-expected retail sales data in August, economists have been expecting strong growth in the U.S. economy in the third quarter. As of September 18, the Goldman Sachs economic team has been tracking and forecasting a 3% GDP for the U.S. in the third quarter, while the Atlanta Fed's GDPNow tool shows an annualized growth of 2.9%.

Federal Reserve Chairman Powell also noted last week that a still healthy economy is not a reason to lag behind the curve in cutting rates. Powell said, "The U.S. economy is in good shape. It is growing at a solid pace. Inflation is low. The labor market is strong. We want to sustain this."

However, there are also signs of a slowdown in the data released on Monday.

The service sector PMI in the S&P report for this month is 55.4, lower than August's 55.7. Meanwhile, the manufacturing PMI continues to slow down, dropping to 47, below the previous month's 47.9, hitting a 15-month low. Readings below 50 indicate contraction.

In addition, prices rose at the fastest pace in six months, with Williamson pointing out that this could raise concerns about inflation.

Williamson stated, "Early survey indicators for September show the economy continuing to grow at a solid pace, although softness in manufacturing and escalating political uncertainty are acting as significant headwinds. At the same time, signs of accelerating inflation suggest that the Fed cannot entirely shift its focus away from the inflation target while trying to sustain the economic recovery."

The future output index from the survey (measuring optimism about economic output for the next year) also fell to its lowest level since October 2022.

Williamson wrote, "Uncertainty surrounding the U.S. presidential election is dampening business sentiment, demand, hiring, and investment, casting a shadow over the outlook for many companies in the coming year."