U.S. private sector business activity growth accelerates modestly in September - IHS Markit's survey

Preliminary data released by IHS Markit on Monday pointed to a muted upturn in U.S. private sector growth during September.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) came in at 51.0 in September, up from 50.3 in August. That was the highest reading since April and signaled a modest overall improvement in manufacturing sector business conditions. Economists had expected the reading to stay at 50.3. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. According to the report, the increase in the headline PMI mainly reflected stronger rates of output and new order growth, alongside a slight upturn in staffing levels.

Meanwhile, the Markit flash services purchasing manager's index (PMI) rose to 50.9 this month, from 50.7 in the prior month. The latest reading was still one of the lowest seen over the past three-and-a-half years. Economists had expected the reading to increase to 51.5. Subdued demand resulted in a faster decline in volumes of unfinished work and a reduction in employment numbers for the first time in just under ten years, the report said.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 51.0 in September, up from 50.7 in the previous month, signaling a subdued business activity growth.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at HIS Markit, said: “The survey indicates that businesses continue to struggle against the headwinds of trade worries and elevated uncertainty about the outlook. Although picking up slightly, the overall rate of growth in September remained among the weakest since 2016, commensurate with GDP rising in the third quarter at a subdued annualized rate of approximately 1.5%. Prospects also look gloomy, with inflows of new business down to the lowest since 2009 and firms’ expectations of growth over the coming year stuck at one of the most subdued levels since 2012.”