NEW YORK: US business activity accelerated to its strongest pace in more than five years in September, driven by stronger new orders and broad-based expansion across the manufacturing and services sectors.
The S&P Global Flash Composite Purchasing Managers’ Index (PMI) rose to 58.4 from 56.0 in August, marking its highest reading in more than five years and signalling continued strength in economic activity heading into the fourth quarter.
The acceleration was led by the services sector, with the Services PMI rising to 58.7 from 56.5. Manufacturing activity also strengthened, with the Manufacturing PMI rebounding to 57.0 from 53.9.
The latest survey indicated that domestic demand remained robust, with stronger new orders, higher output and solid hiring activity being reported by businesses.
However, the stronger expansion was accompanied by renewed inflationary pressures. Input costs increased at their fastest pace in four years, with higher fuel and transportation costs being cited as key factors following the recent rise in oil prices.
US business activity
Supply-chain delays, growing backlogs and labour shortages were also reported, suggesting that capacity constraints could continue to put upward pressure on prices.
The latest figures provide limited evidence of an imminent slowdown in the US economy, while stronger activity could reinforce expectations that interest rates will remain elevated for longer.
For the Federal Reserve, the outlook will continue to depend on incoming inflation and labour-market data, particularly as energy prices and geopolitical developments remain uncertain.
The stronger economic data could provide near-term support for the US dollar, although its direction is likely to remain sensitive to inflation trends, oil prices and global risk sentiment.
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