What the fastest rise in business costs in four years means for a coffee shop, an HVAC firm and an auto shop

U.S. business activity grew in September at the fastest pace in more than five years, according to the S&P Global flash PMI released Wednesday. The composite output index rose to 58.4 from 56.0, the services index hit 58.7 and the manufacturing PMI jumped to 57.0. Treasury yields rose on the news, with the 10-year back above 5%, and Fed Governor Michael Barr said further rate increases are likely needed, CNBC reported.

The headline says boom. For an owner, the part that matters is further down the release: average input costs rose at the fastest rate since October 2022, blamed mostly on fuel and transport and, in many cases, on wages. Service-sector cost inflation was the highest since November 2022.

What the headline misses: costs are outrunning prices in services

S&P Global says selling prices also rose faster in September, but the increase was "muted by competition in some instances, notably in the service sector," and was still below the pace of March through July. Service providers' confidence stayed well below its long-run trend, with firms citing cost-of-living worries and higher borrowing costs. In plain terms: many service businesses are paying more and not yet charging enough more to cover it.

The Atlanta Fed's September Business Inflation Expectations survey points the same way on labor. Firms in the Southeast said wages rose about 3.5% over the past year and expect 3.79% to 3.98% over the next twelve months. Year-ahead unit cost expectations rose to 2.4% from 2.2% in August. Small firms were the least optimistic about hiring, with only about a third expecting to add staff.

Fuel is the other line. The EIA's weekly survey put regular gasoline at $4.478 a gallon on Sept. 21, up $1.305 from a year earlier, and on-highway diesel at $6.529, up $2.78.

A coffee shop: about 1.8% of sales in wages alone

Take a shop with nine employees working a combined 13,500 hours a year at an average $17 an hour: a $229,500 payroll. If wages rise the 3.79% to 3.98% that surveyed firms expect, that is $8,698 to $9,134 more a year. On $500,000 of annual sales, the top of that range is about 1.8% of revenue. Covering it with prices alone means a $5.50 drink going to about $5.60.

That is the hard part for a café: the PMI says competition is holding service prices down. Our directory counts 68,064 independent coffee shops, the most in California (8,628), New York (4,916) and Texas (4,701). Most have a competitor within walking distance.

An HVAC contractor: about $565 a month more for fuel, and pricing power

A four-van crew burning 25 gallons of gasoline per van each week uses 100 gallons. At $1.305 a gallon more than a year ago, that is $130.50 a week, about $565 a month or $6,786 a year.

Contractors are better placed to pass that on than cafés. S&P Global says backlogs of unfinished work rose at the sharpest rate since May 2022, and its chief business economist, Chris Williamson, said that means "companies are developing more pricing power." The same release says supplier delivery delays were the most widespread since July 2022. There are 40,729 independent HVAC businesses in our counts, led by Texas (4,171) and Florida (3,613).

An auto repair shop: labor and parts delays

Four technicians at $30 an hour, full time, cost $249,600 a year before taxes and benefits. A 3.79% to 3.98% raise adds $9,460 to $9,934. The second cost is harder to see: a car on a lift waiting for a delayed part is a bay that is not billing. With supplier delays at their most widespread since mid-2022, that idle time is likely to grow before it shrinks. We count 224,738 independent auto repair shops, the most in California (26,287) and Texas (22,628).

What to actually do

• Contractors: price the backlog now. If your schedule is full weeks out, you have the leverage the survey describes. Shorten quote validity to 30 days and add a fuel or materials adjustment line for jobs that start later.
• Cafés and other service shops: small, specific increases. Where competition is tight, a 10-cent move on high-volume items does more than a broad jump. Run the payroll math above with your own numbers first so you know the gap you are covering.
• Auto shops: order long-lead parts at diagnosis, not at approval, when the customer is likely to say yes, and track days a bay sits idle.
• Everyone: don't borrow on the boom headline. Barr's comments and a 10-year yield above 5% mean floating-rate credit may get more expensive, not less. If the only reason to hire or expand is this survey, wait for the final September data on Oct. 1 and Oct. 5.

Related: what the Fed's hike means for a contractor with a floating-rate line and what record diesel means for truckers and landscapers.

Sources: S&P Global Flash US PMI (Sept. 23, 2026); Atlanta Fed Business Inflation Expectations survey, August and September 2026 reports; U.S. Energy Information Administration weekly fuel prices (week of Sept. 21, 2026); CNBC; CheckThisBiz counts of independent businesses. Payroll, fuel-use and sales figures in the examples are illustrative assumptions; the rates applied to them come from the sources above. This is information, not financial advice.