The S&P Global US Composite Purchasing Managers' Index flash reading came in at 53.6 in September compared to 54.6 in August, and 55.1 in July, falling to a three-month low and signaling a softening of demand growth.

While growth was again seen across both manufacturing and service sectors, both categories reported weakened expansions, leading to slower hiring in both cases, the report said. Tariffs were meanwhile again widely cited as the main cause of sharply higher costs, but weaker demand and stiff competition reportedly limited the scope to raise selling prices, which rose on average at the slowest rate since April.

Still, manufacturing input price inflation remained elevated at one of the highest rates since the COVID-19 pandemic, while service sector inflation jumped to the second-highest recorded over the past 27 months (surpassed only by May 2025). Overall input cost inflation consequently spiked to its highest since May and therefore the second highest level for just over two-and-a-half years.

The US Services PMI Business Activity Index recorded 53.9 in September, down from 54.5 in August, and below expectations of 53.5 in the Econoday survey of forecasters. The Manufacturing PMI came in at 52.0, dropping off from 53.0 in August and failing to meet expectations for 53.5.

While the services economy provided the main driving force behind September's rise in business activity, the sector registered a slowing of growth for a second successive month to the weakest since June, it said. New order inflows in the goods-producing sector also weakened to only a marginal pace, in part due to an increased rate of loss of exports due to tariffs.

The report noted lower job gains across both manufacturing and service sectors. Although service companies continued to take on extra staff in response to rising workloads and improved confidence, the September survey saw a higher incidence of companies unable or unwilling to fill vacant positions. In manufacturing, the survey saw more of a focus on job losses due to cost cutting, it said.

That said, there is an expectation for activity to rise from present levels over the next year with sentiment improving on the back of the Federal Reserve's rate cut.

Forecasters see manufacturing growth marginally slower at 52.0 in the September flash versus 53.0 in the August final. Services expected slightly slower too at 53.5 versus 54.5 in August.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.