India and US September PMIs Jump: India Services Hits 55.8, US Manufacturing Hits 57

Market snapshot: Global economic momentum accelerated sharply in September 2026, driven by a strong rebound in India’s services activity and an impressive dual expansion in both manufacturing and services in the United States. India's preliminary services PMI climbed to 55.8, while US S&P Global manufacturing activity recorded its fastest rate of expansion since May 2022 at 57.0.

Data Snapshot

• The preliminary HSBC India Services PMI rebounded to 55.8 in September 2026, up from 54.1 in August 2026.
• The US S&P Global Manufacturing PMI surged to 57.0 in September 2026, exceeding market estimates.
• The US S&P Global Services PMI climbed to 58.7 in September 2026, compared to 56.5 in the previous month.
• The HSBC India Composite PMI rose to 56.5 in September 2026, up from 54.3 in August, signaling a broad-based recovery.

What's Changed

• The Indian services activity expansion rate accelerated by 1.7 points month-on-month (derived: September flash of 55.8 vs August final of 54.1).
• The US S&P Global Manufacturing PMI registered a sharp 3.1-point monthly increase, rising from 53.9 in August to 57.0 in September.
• The US S&P Global Services PMI expanded by an additional 2.2 points to hit 58.7 in September compared to 56.5 in August.

Key Takeaways

• Stronger output growth and resilient new business inflows drove the sharp recovery in India’s services sector.
• The US economy is showing intense momentum, with manufacturing output expanding at its fastest rate since mid-2022 and jobs growth hitting multi-year highs.
• Underlying price pressures have picked up in both the US and Indian economies, primarily fueled by rising fuel, transportation, and material costs.
• The stronger-than-expected US data has significantly increased investor expectations of a hawkish stance or potential rate hike from the Federal Reserve in upcoming meetings.

SAHI Perspective

The synchronized surge in economic activity across India and the US highlights strong global demand but brings inflation back into sharp focus. For India, the recovery in services is a relief after August's multi-year low. However, in the US, the dramatic expansion in both manufacturing and services to multi-year highs suggests that the economy remains highly resilient despite previous rate hikes. This resilience is likely to keep the Federal Reserve hawkish, potentially putting upward pressure on yields and creating a challenging environment for emerging market capital flows, even as domestic corporate earnings are supported by robust demand.

Market Implications

A stronger US economic footprint reinforces US Dollar strength and pushes Treasury yields higher, which historically weighs on emerging market equity and debt flows. In India, while strong domestic growth metrics are positive for corporate earnings and local equities, macro headwinds from a strengthening dollar and rising US yields could cap immediate upside. Furthermore, the pick-up in input prices across both geographies signals that inflation is not yet fully tamed, complicating the policy paths for both the Reserve Bank of India and the Federal Reserve.

Trading Signals

Market Bias: Neutral

Strong economic growth is positive for corporate earnings, but the massive beats in US PMI data (manufacturing at 57.0 and services at 58.7) lift the threat of a hawkish Fed. Yields are rising, which neutralizes the positive impact of India's services rebound to 55.8.

Overweight: Information Technology, Capital Goods, Industrial Manufacturing

Underweight: Real Estate, Financials, Utilities

Trigger Factors:

• US Federal Reserve monetary policy commentary and interest rate decisions.
• Movement of the US 10-year Treasury yield and the US Dollar Index (DXY).
• Final release of the September PMI data to confirm preliminary flash trends.
• Crude oil price trends and their impact on imported inflation in India.

Time Horizon: Near-term (0-3 months)

Industry Context

The purchasing managers' index (PMI) is a key leading indicator of macroeconomic health. In August, India's services activity had slowed to a 54.1 reading—one of its lowest points in four years—as service providers faced intense competition and softer client interest. However, the September flash recovery to 55.8 points to a solid rebound in new orders and business activity. In the US, the manufacturing sector has been pulling out of a prolonged period of contraction, and the jump to 57.0 in September indicates robust inventory re-stocking and an acceleration in job creation.

Key Risks to Watch

• Resurgent inflationary pressures driven by rising fuel, transport, and operating costs in both India and the US.
• Hawkish Federal Reserve policy shifts, which could lead to further capital outflows from emerging markets like India.
• Friction in global supply chains, with suppliers' delivery times lengthening due to ongoing geopolitical uncertainties, particularly in the Middle East.

Recent Developments

In August 2026, India's services PMI stood at a downwardly revised 54.1, while the manufacturing PMI fell to a near five-year low of 52.8. At the same time, the US manufacturing PMI had settled at 53.9 in August, reflecting moderate expansion before the sharp rebound observed in the September flash estimates.

Closing Insight

The September flash PMI numbers present a classic double-edged sword: exceptional economic expansion that confirms corporate resilience, but with the immediate drawback of sticky cost inflation and higher interest rate risks. Investors should focus on high-quality, margin-resilient sectors that can withstand higher borrowing costs while capitalizing on strong underlying demand.

High Performance Trading with SAHI.