U.S. Growth Stays Positive as September Flash PMIs Cool; External Gap Narrows

U.S. business activity remained in expansion territory in September even as momentum eased, while the nation’s current-account deficit narrowed more than expected in the second quarter, according to data released Tuesday.

S&P Global’s flash purchasing managers’ indexes showed manufacturing at 52.0 (consensus 52.2, prior 53.0) and services at 53.9 (consensus 54.0, prior 54.5), keeping the composite gauge at 53.6 versus 54.6 in August.

Readings above 50 indicate expansion. The figures point to continued growth led by services, with a modest cooling across new orders and output from the summer pace.

In external accounts, the current-account deficit shrank to $251.3 billion in Q2, better than the expected $259.0 billion and sharply below the prior quarter’s $439.8 billion.

The improvement suggests a smaller drag from trade and income flows on headline GDP and may offer marginal support to the dollar.

High-frequency retail data softened: Redbook’s same-store sales rose 5.7% year over year after 6.3% previously, hinting at slower discretionary spending as households navigate higher borrowing costs and a fading summertime travel tailwind.

Regional manufacturing was notably weaker. The Richmond Fed’s September survey showed its headline index dropping to −17 (consensus −5, prior −7), with shipments falling to −20 from −5 and the services index easing to 1 from 4.

The report underscores persistent goods-sector fragility even as national PMIs remain on the positive side of the ledger.

Policy signals were in focus but light on headlines. Chicago Fed President Austan Goolsbee, Governor Michelle Bowman, and Atlanta Fed President Raphael Bostic spoke during the morning, with investors parsing remarks for clues on the path of interest rates and balance-sheet runoff.

No policy decisions were scheduled. Separately, President Donald Trump delivered prepared remarks mid-morning; markets watched for comments on fiscal priorities, tariffs, or regulatory moves that could influence inflation and investment.

Taken together, Tuesday’s data sketch a “slow-but-growing” U.S. economy: services still expanding, manufacturing uneven, consumers tempering but not retrenching, and external balances improving. Upcoming releases will test whether September’s cooling proves a blip or the start of a broader downshift.