Business & Markets
U.S. business survey hits five-year high as costs accelerate
New orders and hiring strengthened, but supply delays and rising input prices complicate the inflation outlook. The early survey reading is a signal, not a GDP result.
Executive summary
- The reading: S&P Global's flash U.S. Composite Output PMI rose to 58.4 in September from 56.0 in August, its highest reading since July 2021.[1][2]
- Demand: The survey's new-orders index increased to 58.2 from 55.2, while S&P Global said hiring rose at its fastest pace since June 2022.[1][2]
- Costs: The input-price index jumped to 66.4 from 59.9, its highest since October 2022; S&P Global also reported unusually widespread supply delays.[1][2]
- The limit: A flash PMI is an early survey of private-sector firms. It indicates the direction and breadth of change, but does not establish actual GDP growth, payroll totals or future interest-rate decisions.[1][2]
U.S. business activity accelerated in September according to S&P Global's preliminary survey released Wednesday. Its flash Composite Output PMI rose to 58.4 from 56.0 in August, the strongest reading since July 2021. The index covers manufacturing and services, and readings above 50 indicate that more surveyed firms reported growth than contraction.[1][2]
The strength was broad enough to show up in demand and staffing. Reuters reported that the new-orders index reached 58.2, up from 55.2 in August and its highest since March 2022. S&P Global said survey employment growth was the fastest since June 2022, as companies tried to meet demand and clear unfinished work.[1][2]
The same survey pointed to a cost squeeze. Its input-price measure climbed to 66.4 from 59.9, the highest since October 2022, Reuters reported. S&P Global cited stretched capacity, longer supplier delivery times and higher energy costs. Stronger sales may give firms more room to pass costs on, but the survey alone cannot show how much will reach consumers.[1][2]
S&P Global's economists said the September reading was consistent with roughly 5% annualized output growth for that month. That is a model-based interpretation of survey responses, not an official GDP estimate or a measured quarterly growth rate. The final PMI reading and subsequent government data may give a different picture. The mix of faster activity and price pressure is relevant to the Federal Reserve's outlook, but it does not determine its next decision.[1][2]