Flash PMIs Beat — Manufacturing 57.0 vs 53.6 Est, Composite at a 62-Month High

Fundamentals · 2026-09-23

The S&P Global flash manufacturing PMI jumped 3.1 points to 57.0 in September against a 53.6 consensus, a 52-month high and the strongest reading since May 2022. Services business activity rose to 58.7 against 56.0 expected, a 59-month high. The composite output index climbed to 58.4 from 56.0 — the fastest expansion since July 2021, and a fourth straight month of acceleration. Manufacturing output hit 56.7, its best since April 2022. New orders rose at the fastest pace in roughly four and a half years in both sectors, backlogs grew at the sharpest rate since May 2022, and employment rose at a pace not seen since June 2022. The cost side came with it: input prices rose at the fastest rate since October 2022, driven by fuel and transport, and supplier delays were the most widespread since July 2022. Survey window 10-22 September.

What It Changes

• It is the strongest US business survey in five years, landing with a second Fed hike already a coin flip. Money markets came into the morning pricing roughly 53-55% for a move on 28 October. A composite at 58.4 with employment, backlogs and input costs all accelerating is close to the ideal data set for the hawks.
• S&P's own translation is roughly 5% annualized growth now, and about 4% for the third quarter. That is the survey's historical mapping to GDP, not a forecast, but it is the scale of what the panel is describing — and it is nowhere near an economy that needs rate relief.
• The manufacturing headline is flattered by the thing it is warning about. Suppliers' delivery times carry a 15% weight in the PMI and are *inverted*, so longer delays push the index up. Delivery times lengthened the most since July 2022. Some of this 3.1-point jump is supply-chain stress being scored as strength.
• But it is not only that — all five components rose. New orders, output, employment, delivery times and stocks of purchases all added to the index. The flattery is real; so is the underlying acceleration.
• The cost surge was recorded at the top of the oil spike. The survey closed on 22 September; WTI settled at $101.91 on the 17th and has fallen for six straight sessions since. The fuel and transport element of September's input-cost jump is unlikely to repeat at the same pace in October.

Impact

• USD — Bullish — the growth differential just widened in the dollar's favor on a morning when rate differentials were already doing the work.
• This morning's Open had DXY at 100.85 after printing 100.862, its highest since late July, and EUR/USD at an eight-week low of 1.1407 despite eurozone flash PMIs beating by more than a point. The US beat is larger than Europe's — manufacturing by 3.4 points, services by 2.7 — so the relative-growth argument points the same way as the rate argument.
• 6A is the pair with the clearest divergence. Australia's flash manufacturing PMI fell back below 50 overnight, to 49.3 from 52.0, and AUD/USD was already the weakest major at 0.7076. A US composite at a five-year high against an Australian factory sector in contraction is the widest gap on the board.
• US Indices (ES / NQ / YM / RTY) — Mixed, lean bearish — the growth is good for earnings, but at 58.4 the composite makes October's meeting more live, and index futures came in flat against Tuesday's settles.
• RTY has the cleanest two-sided exposure. Small caps are the domestic-demand trade and demand here is overwhelmingly domestic — goods export volumes actually fell. They are also the most rate-sensitive, and this print is the strongest argument yet for another hike.
• Gold (GC) — Bearish — gold has been trading as a rates instrument all month, and a survey this strong pushes real-rate expectations the wrong way for it.

Inside The Number

The flash manufacturing PMI rose 3.1 points to 57.0 from August's 53.9, against a consensus of 53.6 — a 3.4-point beat and the strongest improvement in factory conditions since May 2022. The services business activity index rose 2.2 points to 58.7 from 56.5, against 56.0 expected — a 2.7-point beat and a 59-month high. Together they lifted the composite output index 2.4 points to 58.4, the fastest expansion since July 2021, a 62-month high.

Read the scale before the detail. This is the fourth consecutive month of accelerating growth. S&P maps the composite onto official output and puts the September reading at roughly 5% annualized, with about 4% signalled for the third quarter as a whole. Setting aside the post-lockdown reopening surge, S&P describes the improvement in business activity as the largest since early 2015. Chris Williamson's own summary is blunt: "Business is clearly booming now in both manufacturing and services."

Demand is the engine and it is domestic. New orders accelerated in both sectors — to the fastest since March 2022 in services and since April 2022 in manufacturing, with factory order growth the quickest in nearly four and a half years. S&P attributes the demand principally to the domestic market: goods export volumes continued to *fall*, and services exports rose only modestly. That matters for the dollar read. A PMI boom driven by exports would be vulnerable to a stronger dollar; one driven by domestic demand is not.

Capacity is where it starts to strain. Backlogs of uncompleted work rose at the sharpest rate since May 2022, in both sectors. S&P treats backlogs as its key indicator of capacity utilization, and the signal is two-sided: accumulating orders promise more output ahead, but they also mean firms have more pricing power than they did. Williamson flags that second reading explicitly as a worry for the inflation outlook.

Now the component that flatters the manufacturing headline. The manufacturing PMI is not a simple activity measure; it is a weighted average of five indexes — new orders 30%, output 25%, employment 20%, suppliers' delivery times 15%, stocks of purchases 10% — and the delivery-times index is inverted before it goes in, so that slower deliveries *raise* the PMI. The convention exists because in normal times slower deliveries signal strong demand. But suppliers' delivery times lengthened in September to the greatest degree since July 2022, and S&P ties that to supply shortages rather than demand alone.

So part of the 3.1-point jump is supply-chain distress entering the index with a positive sign. The flash release does not publish component values, so the size of that contribution cannot be measured from this report — it will be visible in the final data on 1 October. What can be said is that it is not the whole story: S&P reports that all five components lifted the PMI, with output growth at its fastest since April 2022, new orders at a near-four-and-a-half-year high, and factory jobs growing at the fastest pace since February 2021. The underlying acceleration is genuine. The headline overstates it by an amount this release does not let you quantify.

Employment is the number that ties to the Fed. Payrolls rose at the fastest pace since June 2022, and S&P notes the rate has rarely been exceeded since comparable data begin in 2009. Services hiring was the fastest since June 2022; manufacturing hiring the strongest since February 2021. Firms also reported growing difficulty finding suitable staff. That combination — hiring hard and still short of people — is the tight labor market Chair Warsh described last week when he said the US is "more or less at full employment."

It is worth setting against the Philadelphia Fed survey from 17 September, which went the other way on hiring: its employment index fell 16 points as 77% of firms reported no change in headcount, while 72% called labor supply a constraint. The two surveys agree on the constraint and disagree on the outcome. The S&P panel is national and far larger — around 650 manufacturers and 500 service providers — so on the hiring question it carries more weight than one district's roughly 100 firms.

Prices are the part the Fed will read first. Average input costs across goods and services rose at the fastest rate since October 2022. S&P attributes the jump mainly to fuel and transport, with wage pressure also picking up. Services input-cost inflation hit its highest since November 2022. In manufacturing, raw material costs were linked to shortages, though factory input inflation remained below the peaks recorded in the first months of the war in the Middle East.

Selling prices rose faster than in August too, but less than input costs, and below the rates seen between March and July — competition, particularly in services, held pass-through back.

The timing of the cost surge matters and it cuts in the Fed's favor less than it looks. The survey was collected 10-22 September. WTI settled at $101.91 on 17 September, in the middle of that window, and has since fallen for six straight sessions, with November WTI at $89.85 this morning. So the fuel-and-transport spike S&P describes was captured close to the top of the oil move. If crude holds near $90, the energy contribution to October's input-cost reading should ease. The wage and capacity contributions will not ease with it.

Sentiment is the one soft spot. Output expectations for the year ahead were unchanged, having recovered to their pre-war level in recent months. Manufacturers are more confident, roughly back at the long-run average. Service providers remain well below trend, citing cost-of-living pressure, higher borrowing costs and political uncertainty. Firms that are booming today are not especially confident about next year — which is the same shape Philadelphia showed, where current activity stayed strong while six-month expectations fell 21 points.

The Internals

The four headline indexes, flash September against final August:

Index · September flash · August · Change · Consensus · Since

Manufacturing PMI · 57.0 · 53.9 · +3.1 · 53.6 · Highest since May 2022, 52-month high

Services business activity · 58.7 · 56.5 · +2.2 · 56.0 · 59-month high

Composite output · 58.4 · 56.0 · +2.4 · n/a · Highest since July 2021, 62-month high

Manufacturing output · 56.7 · 53.1 · +3.6 · n/a · Highest since April 2022, 53-month high

What sits inside the manufacturing PMI, and why one component points the wrong way:

Component · Weight in PMI · September direction · Read

New orders · 30% · Fastest in nearly 4.5 years · Genuine demand

Output · 25% · Fastest since April 2022 · Genuine activity

Employment · 20% · Fastest since February 2021 · Genuine hiring

Suppliers' delivery times, inverted · 15% · Longest delays since July 2022 · Supply stress scored as strength

Stocks of purchases · 10% · Rose at an increased rate · Firms building inputs

The rest of the survey, described by S&P against its own history:

Measure · September reading · Since

New orders, services · Accelerated · Fastest since March 2022

New orders, manufacturing · Accelerated · Fastest since April 2022

Backlogs of work, both sectors · Rose sharply · Fastest since May 2022

Employment, overall · Rose sharply · Fastest since June 2022

Employment, manufacturing · Rose · Fastest since February 2021

Input costs, goods and services · Surged · Fastest since October 2022

Input costs, services · Rose · Highest since November 2022

Supplier delays, manufacturing · Most widespread · Since July 2022

Goods export volumes · Fell · Demand is domestic

Selling prices · Rose faster than August · Still below the March-July pace

Output expectations, next 12 months · Unchanged · Back at pre-war levels

This morning's flash PMIs around the world, per The Open:

Economy · Reading · Against consensus

United States, manufacturing · 57.0 · +3.4 points

United States, services · 58.7 · +2.7 points

Germany, composite · 53.8 · +2.0 points against 51.8

Eurozone, composite · 53.1 · +1.4 points against 51.7

United Kingdom, services · 51.7 · -0.3 points against 52.0

Australia, manufacturing · 49.3 · Back below 50 from 52.0

How much a flash reading usually moves before the final, per S&P:

Index · Average flash-to-final change · Average absolute change · Final published

Manufacturing PMI · 0.0 · 0.3 · Thursday 1 October

Services business activity · 0.1 · 0.4 · Monday 5 October

Composite output · 0.1 · 0.4 · Monday 5 October

Inside The Components

The flash release does not publish component values, so the detail has to be read from S&P's narrative — and the narrative is unusually consistent. Every one of the five manufacturing PMI components added to the index. That is worth stating first, because the delivery-times inversion invites the conclusion that the headline is mostly an artifact. It is not. It is a genuine acceleration with an artifact layered on top.

Output and orders did the heavy lifting. Factory production growth revived after easing over the previous three months and reached its fastest since April 2022. New orders — the largest weight at 30% — accelerated to the quickest pace in nearly four and a half years. Those two components alone are 55% of the index, and both moved strongly in the right direction for the right reason.

Employment was the surprise. Factory hiring rose at the fastest rate since February 2021. On the services side, hiring was the fastest since June 2022. Across the composite, S&P says the pace has rarely been exceeded since 2009. That is a striking thing to find in a month when the Philadelphia Fed survey showed its own employment index falling 16 points, and it is the more representative read of the two.

Delivery times are where the index tells two stories at once. Suppliers' delivery times lengthened to the greatest degree since July 2022, and S&P reports supply chain delays as the most widespread since that month. Because the index is inverted in the PMI calculation, those delays *add* to the headline. Williamson places the bottlenecks among the most severe in the survey's near-two-decade history outside the pandemic. That lines up precisely with the Philadelphia Fed's delivery-times index, which jumped 22.8 points last week — its second-largest monthly move since 1968. Two independent surveys, one regional and one national, reporting the same supply-chain lengthening in the same month.

Stocks of purchases rose at an increased rate, the smallest weight at 10%. Firms facing longer delivery times build buffer inventory, so this component partly shares the delivery-times story rather than being independent confirmation of demand.

On services, the single-question headline hides the price detail. The services index is one question — the volume of business activity — so the 58.7 says nothing about margins. The price detail does: services input costs hit their highest since November 2022, while services selling-price increases were held back by competition. That is a margin squeeze in the sector that makes up most of the economy, arriving in a month when services activity hit a five-year high.

And the confidence split is worth holding onto. Manufacturers' expectations for the year ahead are back roughly at the long-run average. Service providers' remain well below it, and they cite the cost of living, borrowing costs and politics. The sector that is growing fastest right now is the least sure it can keep going.

Against This Morning's Open

• The Open had every figure in these rows right — The Open listed manufacturing at 53.6 consensus against a 53.9 prior and services at 56.0 against 56.5. Both priors match S&P's August finals; the manufacturing consensus matches Trading Economics independently.
• Its framing of the morning was the right frame for this print. The Open's lead was that the dollar is being driven by rate differentials rather than by oil — that EUR/USD fell to an eight-week low of 1.1407 even though eurozone PMIs beat. A US beat larger than Europe's reinforces exactly that.
• It also set up the oil-versus-dollar split this release complicates. The Open noted crude down six straight sessions while the dollar rose. This PMI shows firms paying sharply more for fuel and transport in September — the cost of the oil spike is still passing through even as the spike itself unwinds.
• The one thing it could not anticipate is how strong the composite would be. A 62-month high was not in any consensus, and it moves October from a coin flip toward the hawkish side of one.

What This Sets Up

• Final manufacturing PMI — Thursday 1 October; final services and composite — Monday 5 October. Flash-to-final changes average 0.3-0.4 points in absolute terms, so the September story will not change, but the final manufacturing release publishes the component detail that sizes the delivery-times contribution.
• Whether input costs ease in October with oil. September's survey caught crude near $102. With November WTI below $90, the fuel and transport element of input inflation should soften. If input costs stay near a four-year high anyway, the pressure is coming from wages and capacity, which is the harder problem.
• Whether backlogs keep building. Backlogs are rising at the fastest pace since May 2022. S&P reads that as pricing power in the making, and selling prices are already accelerating from August.
• Whether supplier delays keep lengthening. Two independent surveys have now reported the sharpest supply-chain lengthening in years in the same month. A third reading in October would make this the dominant story of the fourth quarter rather than a September spike.
• The 28 October FOMC is the real next event. Coming into this print, markets priced roughly 53-55% for a second hike. A composite at a 62-month high, hiring near a four-year high and input costs at a four-year high is the data set a Chair who called conditions "not restrictive" is most likely to act on.

What Is This?

• What it is: The S&P Global flash US PMI is an early estimate of the monthly purchasing managers' surveys, compiled from panels of around 650 manufacturers and 500 service providers and released about ten days before the final data, using roughly 80-90% of total responses. It publishes four headline figures: the manufacturing PMI, the manufacturing output index, the services business activity index, and the composite output index that combines the two output measures. Each is a diffusion index — the percentage reporting higher plus half the percentage reporting unchanged — seasonally adjusted, so 50 separates expansion from contraction. September's responses were collected 10-22 September.
• Why it matters: It is the first survey read on the current month for the whole US economy, not one district, and it arrives before almost every official release covering the same period. The composite maps closely onto GDP growth, which is why S&P can translate a reading into an annualized growth rate. It also carries price and employment detail that the Fed watches as an early read on inflation pressure and labor demand.
• How to read it: Four things. The manufacturing PMI and the composite are not the same measure — the composite is output only, while the manufacturing PMI blends five components including inventories and delivery times, so the two can diverge. Suppliers' delivery times are inverted inside the manufacturing PMI, so supply disruption raises the headline; in a month of severe bottlenecks the index overstates healthy activity. The services headline is a single question about volume and says nothing about prices or margins, which have to be read from the narrative. And flash is not final — S&P says headline indexes move by 0.3-0.4 points on average between flash and final, which rarely changes the story but can decide whether a reading sits above or below a threshold like 50.

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_For informational purposes only. Not investment advice._