The US services sector performed — and I’ll opt for an understated adjective in the interest of dry humor — well last month. The largest part of the world’s largest economy performed well. Note the emphasis.

At 54.9, the ISM services headline was warm. You could fairly call it “hot” relative to consensus. Economists expected 51.7, and the range from 60 professional forecasters was 50.7 to 52.5. So, out of five-dozen highly-trained macro “experts,” some of whom paid upwards of $100,000 for a PhD, nobody was close on this one.

As the figure below shows, 54.9 was the best read on the country’s marquee gauge of services activity since February of 2023.

The final read on S&P Global’s services PMI for September was 55.2, down slightly from the flash print, but robust all the same.

S&P Global’s Chris Williamson described “one of the fastest rates” of output growth in two-and-a-half years. The US economy, he said, probably expanded 3% last quarter, an encore from Q2’s strong pace.

The ISM subindexes were all strong, with one notable exception: The employment gauge, which slipped below the 50 demarcation line into contraction territory. With the new orders gauge printing 59.4 and the production index damn near kissing 60, it’s hard to imagine the lackluster employment-index print was indicative of a demand problem. As one respondent put it, “Employees [are] leaving, and it’s tough to find new ones.”

Recall that although the quit rate in the JOLTS release this week printed sub-2%, job openings rose above eight million for the first time since May. September’s rate cut “was welcomed [but] labor costs and availability continue to be a concern across most industries,” ISM’s Steve Miller said.

As the figure above shows, the ISM price gauge rose again, to 59.4. The highest guess from economists was 57.

I’m not sure there’s a nice way to put this: That’s not the kind of reading that green-lights rate cuts. We’re talking about ~three-quarters of the US economy, and according to ISM panelists, price pressures are the most pervasive in 17 months if you don’t count an anomalous spike in January.

Williamson warned on this two weeks ago, and he reiterated it on Thursday. “[T]he inflation signals from the survey point to reviving price pressures, principally linked to stubbornly elevated wage growth, which could temper the Fed’s enthusiasm for further aggressive rate cutting,” he said.

The bottom line, for now anyway, is this: If the NFP headline in the September jobs report is soft and/or revisions push the prior months’ headline pace even lower and/or the unemployment rate moves up again, the Fed can stick with the cuts, but if not — and barring any shocks, market-related or otherwise, between now and November 7 — they need to calm down, pause and take a breath next month. If there’s “no rush,” as Jerome Powell insists, prove it.