Private-Sector Output Reaches 3-Month Low Amid Weakening Demand, S&P Survey Shows

12:47 PM EDT, 09/23/2025 (MT Newswires) -- US private-sector output growth hit a three-month low in September amid softening demand, though selling prices rose at the slowest pace since April, according to S&P Global's (SPGI) flash purchasing managers' index released Tuesday.

The composite output index fell to 53.6 this month from 54.6 in August, compared with a 54 reading in a survey compiled by Bloomberg. The manufacturing PMI decreased to 52 from 53, while the gauge for services activity hit a three-month low of 53.9 from 54.5. Wall Street was looking for readings of 52.2 and 54, respectively. The 50-point mark separates expansion from contraction.

"Further robust growth of output in September rounds off the best quarter so far this year for US businesses," S&P Global Market Intelligence Chief Business Economist Chris Williamson said in the report. "PMI survey data are consistent with the economy expanding at a 2.2% annualized rate in the third quarter."

Firms again cited tariffs as the main driver of sharply higher costs, but weakening demand and stiff competition weighed on the potential to raise selling prices, which increased on average at the slowest rate since April, according to the report.

"Although tariffs were again cited as a driver of higher input costs across both manufacturing and services, the number of companies able to hike selling prices to pass these costs on to customers has fallen, hinting at squeezed margins but boding well for inflation to moderate," Williamson said.

Earlier this month, official data showed that US consumer inflation accelerated at the fastest pace in seven months in August, while the annual core rate remained above 3%.

The PMI data indicate that consumer inflation will remain above the Federal Reserve's 2% target in the coming months, according to Williamson. Last week, the Fed reduced its benchmark lending rate by 25 basis points and signaled further reductions this year as it saw increased downside risks to employment.

Private-sector employment increased for a seventh consecutive month in September, though the pace of job creation slowed, the S&P survey showed Tuesday.

"While growth expectations across both manufacturing and services also continue to be dogged by concerns over the political environment, and especially tariffs, September encouragingly saw business sentiment improve in part due to the anticipated beneficial impact of lower interest rates," Williamson said.

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