Economic activity in the U.S. services sector continued to expand in September, as the Services PMI reached 54.9%, its highest level since February 2023, marking a robust recovery.

According to the Services ISM Report On Business released on Thursday, this increase of 3.4 percentage points from August's 51.5% reflects strong growth in business activity and new orders.

The report raises concerns about how it may influence upcoming Federal Reserve rate cuts. With the services sector expanding for 49 of the last 52 months, the data suggests resilient demand, which could influence the Fed's decision on the size of the anticipated November cut.

According...