The US economy is growing at its fastest pace in over five years. S&P Global reported on Wednesday that its flash Composite Purchasing Managers Index rose to 58.4 in September, up from August's reading of 56.0 and well above the consensus forecast of 55.2. It marks the fourth straight month of acceleration and the strongest reading since July 2021.
The services sector led the charge, with the PMI climbing to 58.7 from 56.5, beating expectations of 56.0. Manufacturing also strengthened meaningfully, rising to 57.0 from 53.9 and topping the forecast of 53.6. The manufacturing reading is the highest since May 2022, while services activity grew at the fastest pace since early 2015, barring the post-pandemic reopening spike.
"US business activity growth accelerated for a fourth successive month in September to reach the fastest rate for over five years," S&P Global noted. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the data points to annualized growth of around 5 percent with a 4 percent gain now signalled for the third quarter as a whole. "Business is clearly booming now in both manufacturing and services," he wrote.
But the expansion is coming with mounting constraints. Backlogs of work continued to rise at an increased rate and supply chain delays intensified, pointing to a lack of operating capacity. Firms reported increasing difficulty finding suitable staff, with employment rising at the fastest pace since June 2022. "The latest survey data point to some of the most severe supply chain bottlenecks seen in the near-two-decade survey history if the pandemic is excluded," Williamson noted.
Input costs surged at the steepest rate in four years, driven by the recent spike in energy prices. Fuel and transport costs jumped higher, adding to upward pressure on selling prices. "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, which will add further to the upward pressure on selling prices and inflation in the coming months," Williamson wrote.
The strong data rippled through financial markets. Spot gold dropped 1.74 percent to $4,282.81 per ounce as investors repriced the path for Federal Reserve rate hikes. Treasury yields climbed to levels last seen in 2007, with the 10-year note pushing above 5.09 percent and the 30-year bond approaching 5.39 percent. A $70 billion auction of 5-year notes drew a yield of 5.033 percent with a tail of 3.1 basis points versus an average of 0.6 basis points, a weak result rated D.
Equities retreated. The Dow Jones Industrial Average fell 0.63 percent, the S&P 500 dropped 0.81 percent, the Nasdaq Composite shed 1.25 percent, and the Russell 2000 lost 1.55 percent. The CBOE Volatility Index fell 4.44 percent to 14.21.
The robust growth readings reinforce expectations that the Federal Reserve will deliver another rate increase after lifting the federal funds rate to 3.75-4.00 percent on September 16. Several officials, including Barkin, Collins, and Musalem, have signalled openness to further hikes. The PMI data suggests the economy can absorb tighter policy, but the combination of surging activity, tightening labour markets, and rising input costs means the inflation picture is worsening, not improving.
Sources
- S&P Global, Flash US PMI, September 2026: pmi.spglobal.com
- Kitco News, Spot gold drops to $4,280/oz as flash S&P composite PMI improves to 58.4 in September, 23 September 2026: kitco.com
- TradingEconomics, US Composite PMI: tradingeconomics.com
