Business growth in the United States slowed in September as demand softened across both manufacturing and services. A survey of purchasing managers revealed that levels of unsold stock at US factories rose at the fastest pace in the history of the S&P Global survey. This marks the second consecutive month of weaker growth for American businesses.
Companies pointed to tariffs as the main factor driving higher costs, particularly in manufacturing. Chris Williamson, chief business economist at S&P Global Market Intelligence, said that while output growth remained robust, September’s data showed a slowdown from the peak seen in July. He added that hiring also eased and reports of softening demand were becoming more widespread, limiting companies’ ability to raise prices.
The S&P Global flash US Composite PMI output index fell to 53.6 in September, a three-month low, reflecting the slowing expansion. Although tariffs continued to push input costs higher, fewer businesses were able to pass these costs on to customers, squeezing margins but potentially helping to moderate inflation.
Despite the slowdown, Williamson noted that the third quarter still reflected strong overall performance, with PMI data consistent with an annualized growth rate of 2.2%. However, the monthly trend highlights that the pace of growth is easing, and the buildup of inventory signals that companies may face weaker demand in the coming months.
The combination of rising stock levels and lower pricing power suggests challenges ahead for US businesses. The manufacturing sector, in particular, is dealing with the twin pressures of tariffs and slower order growth. Service companies are also experiencing softer demand, adding to the overall slowdown in business expansion.
The report underscores the impact of trade policies on the US economy and points to a period of more moderate growth. With input costs rising but sales growth slowing, companies may continue to experience margin pressures. Analysts will be closely watching future PMI updates to gauge whether the slowdown is temporary or part of a longer trend.
