U.S. business growth spikes to fastest in over 5 years in September – S&P Global

U.S. business growth reached its fastest pace in over five years in September, according to a flash estimate from S&P Global. The composite purchasing managers' output index rose to 58.4, up from 56.0 in August, marking the highest level in 62 months. This surge in growth was largely driven by a boost in service sector business activity, which was further fueled by a resurgence in manufacturing output. Employment also saw a sharp increase, with job growth occurring at a rate not seen in more than four years.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that this growth surge is the greatest since early 2015, barring the temporary demand spike following the reopening of the economy after COVID-19 lockdowns. Williamson highlighted the presence of "the most severe supply chain bottlenecks seen in the almost two-decade history of the S&P Global survey," which included expanded work backlogs and challenges in finding suitable staff.

These supply chain bottlenecks, coupled with companies reporting difficulties in hiring, could bode well for future output and capacity. However, they also indicate that firms are becoming more aware of their pricing power, which raises concerns for the inflation outlook. In response to the accelerating price gains, the Federal Reserve raised interest rates for the first time since 2023 last week, aiming to curb inflationary pressures.