What Did September Flash PMIs Say About the Global Economy?

The September global flash PMIs pointed to a world economy that keeps growing, with the U.S. out in front and Australia and the U.K. falling behind.

Companies almost everywhere also reported rising costs.

What Are Flash PMIs?

A Purchasing Managers’ Index (PMI) is a monthly survey. S&P Global asks company managers whether output, new orders, hiring, and prices rose, fell, or held steady compared with last month. It turns the answers into a number between 0 and 100. Above 50 means expansion. Below 50 means contraction.

S&P Global builds the “flash” (read: early) estimate from about 80% to 90% of total responses, and final figures follow about a week later. Traders watch flash PMIs because they arrive weeks before official GDP data. Think of the PMI as the weather radar and GDP as yesterday’s rain gauge.

What Did the September PMI Reports Show?

United States: Both sectors beat expectations

Manufacturing surprised the most. The S&P Global US Manufacturing PMI rose to 57.0 from 53.9, well above expectations of 53.6, marking the greatest improvement since May 2022, with all five components contributing. Services stayed the bigger engine.

The services PMI climbed to 58.7 from 56.5, well above the consensus of 56, the strongest services expansion in over five years. Domestic buyers drove the gains. Demand came mainly from the home market, as goods export volumes kept falling and services exports grew only modestly.

Euro Area: Services caught up with factories

Factories held their pace. The Euro Area manufacturing PMI stayed at 52.7, slightly above the 52.6 expected, and the output index rose to 53.4, its highest in 55 months.

Services produced the surprise. The services PMI jumped to 53.0 from 51.6, its highest in nearly a year and well ahead of the poll estimate for a fall to 51.5. France showed the same split. French services came in at 51.4 against 48.3 expected, while French manufacturing slipped to 50.3, below the 50.9 forecast.

United Kingdom: Factories up, services down

UK manufacturing rose to 52.0 from 51.7 on rising domestic orders, with sector optimism at a seven-month high.

Services moved the other way. The services PMI fell to 51.7 from 52.5, a three-month low, against a Reuters poll forecast of 52.0. Price pressure is building in services. Services firms raised prices at the fastest pace in four months.

Japan: Manufacturing still leads, but both sectors cooled

Japan’s manufacturing PMI fell to 54.1 from 54.9, slightly below expectations of 55.0, the softest factory expansion since February.

Services dropped to 51.6 from August’s five-month high of 52.5. S&P Global still called manufacturing the main engine of the economy’s performance in September, helped by a weak yen and strong export demand.

Australia: Factories contracted

Australia’s manufacturing PMI dropped to 49.3 from 52.0, its first contraction reading since March, with factory output falling at the fastest pace in 21 months. Services slowed to 51.4 from 53.2.

Why Are the Flash PMIs Flashing Inflation Warnings?

Energy looks like the main culprit. S&P Global reported that U.S. input costs rose at the fastest rate since October 2022, with firms blaming higher fuel and transport costs.

Similar results came from abroad, as Australian firms pointed to Middle East-related energy and fuel costs, and U.K. input price inflation reached its highest since June.

In the U.S., strong demand may be adding pressure. Backlogs of uncompleted orders rose at the fastest rate since May 2022. Analysts noted that the pile-up of orders suggests companies are gaining pricing power, which may be worrying for the inflation outlook. Picture a restaurant with a line out the door. The owner can raise menu prices, and customers keep waiting.

Other economies show more strain. High energy prices, higher borrowing costs, geopolitical worries, and uncertainty before the Autumn Budget are holding back U.K. growth, confidence, and hiring. Australian private-sector employment fell for the first time in four months.

Economists use the word “stagflation” for slow growth plus rising prices (a nasty combo, since the usual fix for one side tends to worsen the other). The U.K. and Australia are showing early signs of that mix.

What Do the Global Flash PMIs Mean for Forex Markets?

USD: Many traders appear to have read the U.S. beat as a reason for the Federal Reserve to keep hiking. Traders priced a nearly 70% chance of an October hike, up from 50% a week earlier, according to the CME FedWatch Tool. Fed Governor Michael Barr also said more rate hikes are likely given rising inflation risks and a strong economy.

EUR: The euro’s reaction trips up a lot of new traders. The Euro Area PMIs beat forecasts, yet EUR/USD dropped to 1.1378, a two-month low. However, this currency pair works like a tug-of-war. The U.S. data beat by more and U.S. yields jumped more, so the dollar appears to have pulled harder.

GBP: Cable sat near a three-month low at 1.3231, likely weighed down by soft U.K. growth and a firm dollar.

AUD: AUD/USD fell 22 pips to 0.7103 right after Australia’s manufacturing release, as the numbers dampened RBA tightening hopes somewhat, though caution ahead of the Trump-Xi summit and Australian jobs data may have kept the reaction muted.

Two paths stand out for the months ahead:

If costs flow into consumer prices, central banks may hold rates higher for longer, which tends to support currencies of the fastest-growing economies.
If high borrowing costs choke off demand, the weaker Australian and U.K. surveys could serve as an early warning for everyone else.

The Bottom Line

Above 50 means growth. Every major economy expanded in September, though the pace ranged from barely growing in Australia to booming in the U.S.
Price gauges matter as much as the headline. Markets zeroed in on what rising costs could mean for inflation and interest rates.
Forex runs on relative strength. A strong Euro Area print lost out to a stronger U.S. print.
Energy ties the surveys together. Oil prices linked to the Middle East conflict show up in nearly every region’s cost data.
Flash data sets the tone. Final PMIs seldom change the picture much, but they can.

What Should Traders Watch Next?

September 29: Reserve Bank of Australia (RBA) rate decision
October 1 and October 5: Final U.S. manufacturing PMI, then final services and composite PMIs

September’s flash PMIs gave traders an early read on growth and inflation across the major economies, but it isn’t always clear why these surveys can move currencies weeks before official GDP data arrives. Premium members can read our lesson:

📖 Key Economic Indicators: The Data That Moves Currencies

Reading this helps you understand which economic indicators actually move markets, how leading data like PMIs differ from lagging reports like GDP, and which releases to watch first when gauging an economy’s momentum.

And if you’re not a Premium subscriber yet, now’s a good time to sign up.

With Babypips Premium, you get full access to School of Pipsology lessons that help you understand not just whether a PMI beat or missed forecasts, but how early growth and price signals shape rate expectations and currency moves.

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