Full Breakdown
US Business Activity Surges to Five-Year High in September
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Record Business Activity in September
On September 23, the S&P Global flash U.S. Composite Purchasing Managers’ Index (PMI) Output Index rose to 58.4, the strongest level since July 2021 and up from 56.0 in August. The index, which signals expansion above the 50-point threshold, reflected robust growth in both manufacturing and services. The survey’s new-orders gauge jumped to 58.2, the highest reading since March 2022, indicating accelerating demand across sectors.
Key Data Points
- Manufacturing PMI: 57.0, a 52-month high.
- Manufacturing Output Index: 56.7, the highest in 53 months.
- Services Business Activity Index: 58.7, a 59-month high.
- Input-price index: 66.4, the strongest level since October 2022, driven by higher raw-material and fuel costs.
- Backlog of unfinished work: fastest rise since May 2022, signaling capacity constraints.
- Employment growth: overall hiring accelerated at the fastest pace since June 2022; manufacturing hiring hit its quickest rate since February 2021.
Supply Chain Strains and Cost Pressures
The survey noted “the most widespread” supply-chain delays since July 2022, with longer supplier lead times and higher transportation expenses. Companies linked rising raw-material prices to persistent shortages, while fuel price spikes further lifted input costs. The Federal Reserve recently lifted its benchmark overnight interest rate by 25 basis points to the 3.75 %–4.00 % range and signaled additional hikes may follow.
Official Commentary
Chief business economist Chris Williamson of S&P Global described the environment as a “boom” in both manufacturing and services, while warning that the buildup of uncompleted orders could grant firms greater pricing power and raise inflation concerns. He also highlighted that the surge in activity, after excluding COVID-related reopening effects, represents the strongest improvement since early 2015.
Verbatim Quotes
- “Business is clearly booming now in both manufacturing and services,” — Chris Williamson, chief business economist
- “While this accumulation of uncompleted orders bodes well for the further expansion of output and capacity in the coming months, it also indicates that companies are developing more pricing power, and hence is a worry for the inflation outlook,” — Chris Williamson, chief business economist
- “US business continues to boom, with output growing at the fastest rate for over five years in September,” — Chris Williamson, chief business economist
- “Firms’ input costs have meanwhile jumped in September at the steepest rate for four years, with fuel and transport costs spiking higher thanks to the rise in oil prices seen during the month,” — Chris Williamson, chief business economist
Implications for Distributors
The rapid expansion offers distributors heightened demand for industrial, electrical, and MRO products. However, longer lead times and rising input costs may compress inventory availability and pricing, requiring tighter supply-chain management to meet customer expectations.