The S&P Global composite PMI rose to 58.4 in September, the strongest expansion in overall business activity in over five years. Services activity drove the gain, with new orders and hiring accelerating even as input costs climbed at their fastest pace in nearly four years.
The S&P Global composite PMI rose to 58.4 in September from 56.0 in August, the strongest expansion in overall business activity in over five years. Services activity led the move, with the business activity index climbing to 58.8 from 56.5, the strongest reading since July 2021.
Growth broadens across service categories
All five service-sector categories reported higher activity for the first time in ten months, with transport and storage returning to growth and information and communication leading the expansion. Strong domestic demand pushed new orders to their fastest pace in four-and-a-half years. Companies responded by hiring at the fastest pace since June 2022, even as backlogs of unfinished work grew for a 19th consecutive month — the sharpest buildup in almost four-and-a-half years.
Inflation pressure returns alongside the growth
Stronger activity came with renewed inflation pressure, as companies reported higher gasoline, transportation and labor costs. Input cost inflation accelerated to its highest rate since November 2022 after easing in August, and businesses raised selling prices at the second-fastest pace in just over a year, behind only July.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey data point to "an economy gaining momentum, but with inflation pressures building alongside it". He said the surveys suggest growth of around 4% in the third quarter, with September alone signaling a 5% pace — survey-based estimates, not official GDP figures. Business confidence improved to a one-year high, he said, even as inflation stays stubbornly above the Federal Reserve's 2% target.
Stocks rebound, yields edge higher
US stocks rebounded at the open after the report, with the S&P 500 up 0.14% and the Nasdaq up 0.6%. The Dow Jones Industrial Average was still down 0.53%, while the Nasdaq 100 added 0.43%.
Treasury yields also moved higher out the curve, with the 10-year up 2.76 basis points even as the 2-year slipped 2.4 basis points. Williamson's own takeaway was that growth is carrying into the fourth quarter, though the accompanying rise in prices raises the risk the economy is running too hot, with inflation remaining stubbornly above the Fed's 2% target.
Source: investingLive
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