U.S. Manufacturing Hits 52-Month High in S&P Global Flash PMI, Raising Inflation Concerns

U.S. manufacturing activity accelerated in September to its strongest level in more than four years, according to S&P Global’s flash survey, adding to evidence of a broader economic upswing while reviving concerns about inflation and interest rates.

S&P Global Market Intelligence said its Flash U.S. Manufacturing Purchasing Managers’ Index rose to 57.0 in September from 53.9 in August. A reading above 50 indicates expansion, while one below 50 signals contraction. The September figure, first published Sept. 23 and highlighted again Monday by the National Association of Manufacturers, was a 52-month high — the strongest reading since May 2022.

The gain mattered beyond the headline. S&P said factory production accelerated at its quickest pace since April 2022, and new-order growth in manufacturing was the strongest in roughly four and a half years. Hiring also improved in manufacturing, part of a broader pickup in labor demand that lifted employment across manufacturing and services at the fastest pace since June 2022.

The stronger factory reading was not an isolated signal. In the same Sept. 23 release, S&P said its Flash U.S. Composite PMI, which combines manufacturing and services, rose to 58.4, while the Flash U.S. Services Business Activity Index reached 58.7. Together, the figures pointed to faster growth across much of the economy at the end of the third quarter.

PMI surveys are closely watched because they provide an early snapshot of business conditions before many official government data series are released. The flash reading is a preliminary estimate based on monthly survey responses from purchasing managers, whose answers on output, orders, employment and prices help gauge the direction of activity.

That matters now because a jump in manufacturing, combined with rising costs and supply strains, suggests the economy is strengthening even as price pressures persist. S&P said the September survey was consistent with annualized gross domestic product growth of about 5% for the month and about 4% for the third quarter as a whole.

At the same time, the report pointed to inflation risks. S&P said input-cost growth hit its steepest rate in nearly four years, citing higher fuel and transport costs. Supplier delivery times lengthened to the most widespread extent since July 2022, while backlogs of work increased at the sharpest rate since May 2022. Those cost and supply developments, S&P said, sent a “hawkish signal” for interest rates — meaning they could reinforce the case for keeping borrowing costs elevated or raising them further.

“Flash PMI data from S&P Global shows US business continues to boom, with output growing at the fastest rate for over five years in September,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in commentary released with the data on Sept. 23.

Financial markets quickly reflected that tension between stronger growth and the risk of stickier inflation. After the Sept. 23 release, Treasury yields rose, with the 10-year yield moving above 5%, while stocks fell as traders increased expectations of further Federal Reserve tightening.