Tariffs were meanwhile again widely cited as the main cause of sharply higher costs, but weaker demand and stiff competition reportedly limited the scope to raise selling prices, which rose on average at the slowest rate since April. Slower than expected sales reportedly also contributed to the largest rise in factory inventory levels of unsold stock in the history of the survey.

More encouragingly, business confidence in the outlook improved, partly reflecting hopes that lower interest rates will help offset some of the anticipated impacts from tariffs and broader policy uncertainty.

The headline S&P Global US PMI Composite Output Index fell from 54.6 in August to 53.6 in September, according to the 'flash' reading. However, although signaling a weakened rate of growth for a second successive month, the still-elevated PMI reading indicates that the third quarter a whole has seen the strongest average monthly expansion since the end quarter of 2024.

Output has now grown continually for 32 months. While the services economy provided the main driving force behind September's rise in business activity, the sector registered a slowing of growth for a second successive month to the weakest since June. Inflows of new orders for services likewise showed the smallest rise for three months as weaker domestic demand growth offset the first rise in exports since March.

Higher output was meanwhile reported in the manufacturing sector for a fourth consecutive month, but the expansion was much weaker than the strong gain (a 39-month high) seen in August. New order inflows in the goods-producing sector also weakened to only a marginal pace, in part due to an increased rate of loss of exports due to tariffs.

The S&P Global US Manufacturing PMI fell from 53.0 in August to September 52.0, according to the flash reading, signaling an improvement of factory business conditions for the eighth time in the past nine months, albeit with the rate of improvement slowing from August's 39-month high.

The average manufacturing PMI reading for the third quarter was slightly below that of the second quarter. Production rose for a fourth consecutive month, albeit to a lesser degree. While new orders rose for a ninth straight month, the increase was only marginal.

Factory employment growth also edged lower, with a weaker gain in input inventories likewise weighing on the headline PMI. The suppliers' delivery times index was consequently the only component to push the PMI higher as lead times lengthened to the greatest degree in four months.

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