US Business Activity Jumps to 58.4 in September, Highest in More Than 5 Years

Key Facts

US private-sector growth accelerated in September as S&P Global's flash composite purchasing managers' index rose to 58.4 from 56.0 in August. The reading was the highest since July 2021, indicating the fastest expansion reported by surveyed businesses in more than 5 years. Manufacturing reached 57.0 and services activity hit 58.7, showing that the improvement extended across both sectors. Faster hiring and higher input costs accompanied the rise, making the release relevant to expectations for interest rates as well as growth. The figure is a preliminary business survey reading that describes reported activity, rather than a direct measurement of gross domestic product.

The monthly comparisons show the scale of the acceleration: manufacturing climbed from 53.9 in August to 57.0 in September, while services rose from 56.5 to 58.7. Manufacturing reached a 52-month high and services a 59-month high, compared with a 62-month high for the composite measure. A reading above 50 means more surveyed firms reported improvement than deterioration from the preceding month; it does not express a percentage increase in output. The composite's 58.4 therefore cannot be read as an economic growth rate or reconstructed by simply adding the sector readings. Changes from each index's August base matter more: both sectors improved, so the advance did not rely on a single source.

The link between the survey and financial markets starts with new orders, which accelerated in both manufacturing and services. As orders increase, companies need more output, workers and operating capacity to fill them, helping explain why stronger activity and hiring appeared together. When capacity cannot expand as quickly as demand, unfinished work accumulates and firms may find it easier to pass costs on to customers. That possibility matters to bond investors because persistent inflation can increase expectations that interest rates will stay higher for longer. For equities, higher discount rates can offset the benefit of stronger demand to revenue, so a growth reading alone does not determine the direction of prices.

The manufacturing detail shows an improvement beyond the sector's headline figure: its output index rose from 53.1 in August to 56.7 in September. Survey data also show faster new orders across both sectors, supported mainly by domestic demand. Goods exports continued to decline and services exports grew only modestly, making the strength of the home market clearer than that of external demand. Services remained a major source of overall growth, but the revival in factory output added another source of momentum after a softer stretch for manufacturing. This distinction helps assess the advance: sustained output alongside orders is more persuasive than a higher headline index unsupported by demand.

Employment in the survey grew at its fastest pace since June 2022, while manufacturing hiring was strongest since February 2021. Even so, the addition of workers did not prevent backlogs from rising at their sharpest rate since May 2022. Companies also reported longer supplier delivery times, with delays more widespread than at any point since July 2022. These signals fit together: orders beyond available capacity become unfinished work, while delayed inputs extend completion times even when staffing rises. Backlogs can support production in coming months, but they also raise the risk that operational constraints persist if firms cannot expand capacity fast enough.

Prices were the less comfortable part of the report, with firms' input costs rising at their fastest pace since October 2022. The survey pointed to higher fuel and transport expenses as oil prices rose during the month, alongside stronger wage pressure. Selling prices increased faster than in August but more slowly than between March and July, a distinction that prevents treating every price gauge as equally hot. Competition, particularly in services, may limit how quickly businesses can transfer higher costs to customers. The inflation significance of the cost surge therefore depends on whether input pressures persist and whether subsequent increases in selling prices become more widespread.

The preceding readings put September in context: the composite index was 54.5 in July and 56.0 in August before reaching 58.4. S&P Global said activity growth accelerated for a 4th consecutive month, making the latest jump part of an established sequence. It estimated that the survey implies roughly 4.0% annualized growth for the third quarter and a pace near 5.0% for September alone. Those are estimates inferred from historical relationships between the survey and economic activity, not official GDP figures or assured outcomes. Successive monthly gains strengthen the evidence of momentum, while the quarter's actual growth remains subject to subsequent economic data.

The release follows the Federal Reserve's September 16, 2026 decision to lift its federal funds target range by 0.25 percentage point to 3.75%–4.00%. The Fed said inflation remained elevated against its 2% goal, and Kevin Warsh chairs the Federal Open Market Committee. Faster activity and hiring alongside rising costs make the policy assessment more complicated than the growth figure alone suggests. Sustained demand could support keeping policy restrictive, while actual inflation data will determine the case for any further tightening. For holders of bonds or rate-sensitive equities, the effect on expected interest rates matters more than the isolated level of the composite index.

Businesses' expectations for output over the coming year did not rise in the September survey, despite stronger current activity and growing backlogs. Manufacturers were more optimistic than service providers, whose confidence remained below its usual level. That separates the present pace of work from firms' assessment of their ability to sustain it, a useful distinction when judging momentum. Backlogs may support production for a time, but expansion plans also depend on expected costs, financing and subsequent demand. The confidence measures therefore complement the activity reading without making a single month's jump a guarantee of similar growth ahead.

The next scheduled monetary-policy test is the Federal Open Market Committee meeting on October 27–28, 2026. Before that decision, final September survey readings and official data on growth, employment and prices can test the preliminary signal. The case for durable acceleration would strengthen if orders and output remained firm without a further broadening of selling-price pressures. Downward survey revisions, or a sustained cost surge passed through to customers, would alter the growth-inflation balance in different ways. The 58.4 reading is therefore a starting point for assessing rates and yields, not a standalone forecast of the committee's decision or any asset's price.