Manufacturing PMI comes in a little stronger than expected

U.S. companies signalled a further solid rise in business activity during September, albeit one that was slightly weaker than seen in August, rounding off a solid third quarter. Manufacturers and service providers alike noted strong expansions in output, with goods producers registering a faster rise in production.

Adjusted for seasonal factors, the IHS Markit Flash U.S. Composite PMI Output Indexposted54.4 at the end of the third quarter, down slightly on 54.6 seen in August. The index’s quarterly average was  the highest since the opening three months of 2019.

The composite index is based on original survey data from IHS Markit’s PMI surveys of both services and manufacturing. Although the pace of expansion slipped slightly from that seen in August, the solid upturn in private sector output was a marked improvement following the substantial drops in activity during the second quarter, with the downturn having peaked in April at the depths of the pandemic.

Meanwhile, new orders increased for the second successive month, growing at the fastest rate since February 2019. The strong expansion was largely linked to an acceleration in the pace of new business growth at service providers.Companies continued to report a recovery in foreign client demand, notably for services, although the overall pace of new export order growth eased following a slowdown in manufacturers’ foreign sales.