U.S. services sector activity accelerated sharply in August, with the S&P Global Purchasing Managers' Index rising to 56.8 from 54.6 in July, marking the highest reading in 20 months and surpassing expectations of 53.9.
The manufacturing PMI, meanwhile, edged down to 53.2 from 53.9 in July, reflecting slower growth attributed to reduced inventory accumulation and supply chain delays linked to the Middle East conflict. The composite PMI, which combines both sectors, increased to 56.0 from 54.5 in July, exceeding projections of 54.0.
S&P Global’s chief business economist, Chris Williamson, noted that supply disruptions remain among the most severe in four years, constraining output for many firms. He warned that price pressures could intensify if energy costs rise further. Williamson described U.S. business activity as "booming," with output growth in the third quarter running at its fastest pace in over four years.
Economic projections suggest annualized growth near 3.0% for the third quarter, up from 1.5% in the second quarter. Williamson also highlighted a "welcome revival" in hiring as employers gain confidence that the impact of the Iran war and U.S. tariffs is diminishing.
