U.S. manufacturing activity experienced a significant surge in September, with factories reporting their fastest growth in output in over four years, driven by an acceleration in new orders and robust hiring. This robust data, released Wednesday, paints a picture of resilient American industry.
The S&P Global flash manufacturing purchasing managers’ index (PMI) leaped to 57.0 from 53.9 in August, dramatically surpassing economists' expectations of 53.6. A reading above 50 signifies an improvement in business conditions, making September’s figure the highest since May 2022 – a clear indicator of burgeoning economic vitality.
This surge wasn't limited to the headline number. The survey's measure of factory output climbed to 56.7 from 53.1, reaching its highest level since April 2022. Manufacturers reported their strongest growth in new orders since that same period, while factory employment saw its fastest increase since February 2021. Inventory levels also grew at an accelerated pace, signaling confidence and preparation for future demand.
These figures provide a stark contrast to August's softer government production data, which showed a 0.3 percent decline in manufacturing output. September’s strong showing suggests that American factories are not only rebounding but are doing so with considerable force, challenging narratives of economic stagnation.
The economic strength extended beyond manufacturing. S&P Global’s services business activity index soared to 58.7 from 56.5, exceeding forecasts and marking its highest level in nearly five years. Service providers reported their most substantial growth in new business since March 2022, underscoring a broad-based economic expansion.
Combined, these two vital sectors propelled S&P Global’s composite output index to 58.4 from 56.0 in August, reaching its highest point since July 2021. This marks a fourth consecutive month of accelerating growth, with domestic customers largely credited for the surge in orders – a testament to the strength of the American consumer and the America First economic engine.
To meet this burgeoning demand, companies significantly ramped up hiring, with employment across manufacturing and services rising at its fastest pace since June 2022. Even with the influx of new workers, unfinished orders accumulated at their quickest rate since May 2022, indicating that firms are diligently working to keep pace with the wave of new business.
“US business continues to boom,” declared Chris Williamson, chief business economist at S&P Global Market Intelligence. He noted that historical comparisons suggest an annualized economic growth of approximately 5 percent in September and 4 percent for the third quarter as a whole, painting a robust economic picture.
Further corroborating this positive trend, the Federal Reserve Bank of Atlanta’s GDPNow model estimated third-quarter growth at a 5.1 percent annual rate as of Sept. 17. These converging data points reinforce the narrative of significant economic resilience despite lingering challenges.
However, this expansion is not without its caveats. Businesses reported their fastest rise in input costs since October 2022, citing increasing fuel and transportation expenses. While selling prices also rose more quickly than in August, the persistent rise in input costs highlights the inflationary pressures that continue to burden American businesses and consumers. True economic strength means not just growth, but growth free from the insidious tax of unchecked inflation, a challenge that requires steadfast, common-sense leadership focused on the prosperity of every American, not just the numbers on a chart.
