US business activity cools further, no widespread price increases

Core Insights - U.S. business activity has slowed for the second consecutive month in September, with firms facing increased costs due to tariffs but not passing these costs onto consumers, which is positive for inflation outlook [1][2] Group 1: Business Activity - The S&P Global's flash U.S. Composite PMI Output Index decreased to 53.6 in September from 54.6 in August, indicating a slowdown in both manufacturing and services sectors [2] - The measure of prices paid by businesses for inputs rose to 62.6 from 60.8, with tariffs cited as the main cause of cost increases [2] - The gauge of prices charged by businesses for goods and services fell to 56.0 from 58.3, as firms struggled to pass on higher costs due to weak demand and competition [2][3] Group 2: Inflation and Economic Outlook - Despite recent inflation increases, prices have not surged as anticipated following the implementation of tariffs, with consumers becoming more selective [2] - The number of companies able to raise selling prices has decreased, indicating squeezed margins but suggesting moderation in inflation [3] - The Federal Reserve has resumed cutting interest rates, lowering the benchmark overnight interest rate by 25 basis points to a range of 4.00%-4.25% and projecting continued reductions through 2025 [3]