Two things happened Thursday within shouting distance of each other.
Governor Christopher Waller said the inflation trend looks better and he might hold on September 16.
Then ISM said services companies paid the most for stuff since August 2022.
If those two sentences feel like they cannot share a planet, welcome to 2026.
The ISM print, in English
The Services PMI — a survey of purchasing managers, not a government jobs count — rose to 55.4 in August from 54.1. Anything over 50 means expansion. This was the 26th straight month above that line, and the strongest in six months.
Under the hood:
- Business activity 61.7
- New orders 60.9
- Employment 47.8 — contracting for a second month
- Prices paid 72.6, up from 70.3, highest since August 2022
Chair Steve Miller said the two complaints that came back were tariffs and the Middle East conflict. Petroleum, diesel, gasoline. You can see the Strait of Hormuz in a survey of office parks.
Why this is not the same as CPI
ISM prices are what buyers say they paid this month. Sticky, noisy, and heavy on inputs.
The Fed’s North Star is PCE inflation, which Waller said is 3.7% over twelve months, with three-month core around 3.05% and falling from 4.76% in February.
A purchasing-manager index can scream while the official price index is quietly cooling. It can also be the early warning that the cooling was a head-fake. That is why desks will not let 72.6 go.
Five of the last six months, ISM services prices were above 70. The 12-month average is 68.5, highest since April 2023. That is not a blip. That is a bruise.
The punchline for September 16
Activity up, hiring down, prices up. That is a late-cycle cocktail: the economy can still grow while it stops adding workers and keeps charging more. Waller can still vote to hold if August CPI cooperates. He already said a hot inflation print would push him toward a hike.
Bottom line: ISM is the receipt from the war and the tariff. PCE is the report card. Until September 11, you have both in your pocket and they are not friends.
GLHR NEWS explains the news. Not investment, tax, or trading advice. Do your own work before you act.
