US business activity accelerated in September to its fastest pace in more than five years, according to a preliminary S&P Global survey released Wednesday, September 23. The stronger reading came with a warning that higher costs and supply delays could add to inflation, and it pushed US bond yields higher as stocks fell.
The flash composite purchasing managers’ index, which combines services and manufacturing, rose to 58.4 from 56.0 in August, Reuters reported. It was the highest reading since July 2021. A figure above 50 indicates that private-sector activity is expanding, though the survey measures the direction and pace of change rather than the total size of the economy.
New orders rose across both sectors, with the survey’s orders gauge reaching 58.2, its highest since March 2022. S&P Global also reported growing backlogs and longer delivery times, suggesting that businesses were struggling to meet demand. Companies increased hiring to handle unfinished work, but some reported difficulty finding suitable staff, Reuters said.
The survey’s input-price index climbed to 66.4 from 59.9 in August, its highest level since October 2022. S&P Global linked the increase to energy costs and supply shortages. Its chief business economist, Chris Williamson, said the combination of strong demand and limited capacity was giving companies more scope to raise prices. The survey is an early estimate and does not establish how quickly consumer prices will change.
Financial markets reacted to the risk of persistent inflation and further interest-rate increases. The Associated Press reported that the yield on the benchmark 10-year US Treasury note rose to 5.11%, a level last seen in 2007. At Wednesday’s close, the S&P 500 was down 0.8%, the Dow Jones Industrial Average 0.7% and the Nasdaq composite 1.1%, according to AP.
The Federal Reserve raised its benchmark rate by a quarter of a percentage point last week to a range of 3.75% to 4.00%, Reuters reported. September’s survey adds evidence of vigorous growth but also of pressure on costs. Investors and policymakers will watch later inflation data and the final PMI reading to assess whether the price increases persist.
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