| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 58.4 | 56.0 | ||
| Manufacturing Index | 53.6 | 53.0 to 54.7 | 57.0 | 53.2 |
| Services Index | 56.0 | 53.7 to 56.5 | 58.7 | 56.8 |
Highlights
The S&P Global US Composite Purchasing Managers’ Index preliminary reading came in at 58.4 in September compared to 56.0 in August, and 54.5 in July. This is the strongest growth rate since July 2021, with another spike in service sector activity complemented by a rebound in manufacturing output at the fastest rate since April 2022.
There were sharp increases in employment – job creation was at a pace not seen “for over four years” – as well as new orders, primarily from the domestic market. However, supply chain challenges, and the knock-on effects on work backlogs, have intensified – indicating a lack of capacity that is leading to higher prices.
The recent surge in energy prices is fueling higher input costs, worsening the inflation outlook.
The US Services PMI Business Activity Index recorded 58.7 in September, compared to 56.5 in August, and 54.6 in July, above expectations of 56.0 in the Econoday survey of forecasters.
The Manufacturing PMI’s preliminary reading came in at 57.0, compared to 53.9 in August, July and June and beating expectations for 53.6 in the Econoday survey of forecasters. This is the strongest improvement since May 2022.
“Production growth revived after having waned over the prior three months, reaching its fastest since April 2022, as new orders growth also accelerated to the fastest in nearly four-and-a-half years,” the report said.
Looking ahead, S&P said sentiment is mixed. Manufacturers are still more upbeat compared to service providers. Factory confidence is back to its long-run average, while service providers’ sentiment remained well below trend level amid worries over cost-of-living concerns, higher borrowing costs and political uncertainty.
On the inflation front, the average input costs across both goods and services surged higher, with the overall rate of inflation reaching the highest since October 2022. Respondents blamed higher fuel and transport costs, although they also noted an uptick in wage pressures “in many cases.”
Selling price inflation also rose in September, although muted by competition in some instances, especially in the service sector. Overall, September’s selling price rise was above August but below the rates seen between March and July.
Market Consensus Before Announcement
Business activity seen expanding at a slightly slower pace in the first part of September with the manufacturing flash at 53.6 versus 53.9 in the August final, and with services at 56.0 in September versus 56.5 in the August final.
Definition
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.
Description
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.