U.S. services prices reach four-year high in September

U.S. services prices reached their highest level in four years in September, while activity growth slowed, according to data from the Institute for Supply Management released Oct. 5.

The ISM services prices index rose to 74.0 from 72.6 in August. It reached 74.5 in July 2022. The index measures the direction and breadth of changes in input costs reported by businesses. It does not measure the size of price increases or represent a consumer-inflation rate.

The services PMI fell to 54.9 from 55.4. The business activity index dropped to 56.5 from 61.7. Both readings remained above 50, which marks the boundary between expansion and contraction.

The employment index rose to 50.1 from 47.8, returning to slight expansion after two months below 50.

Federal Reserve Vice Chair Philip Jefferson described inflation risks as tilted higher in remarks on Oct. 1. He referred to the central bank’s quarter-point increase in the federal funds target range in September, which brought it to 3.75%–4.00%. Future interest-rate decisions will depend on economic data, the outlook and the balance of risks, according to his remarks.

The services data added to evidence of higher input costs while showing slower sector growth. The federal funds rate and Bitcoin perpetual-futures funding rates measure different things. Perpetual-futures funding consists of payments between long and short traders that help keep contract prices aligned with the spot market.

Bitcoin traded at about $85,628 on Oct. 6. It was down 0.15% over 24 hours and up 2.40% over seven days and 7.14% over 30 days. Those changes do not establish whether the market reacted to the ISM report.

A February 2023 study by the Federal Reserve Bank of New York, based on intraday data, found that Bitcoin was largely disconnected from monetary and macroeconomic news during the period examined.