The U.S. services sector accelerated in August, driving a broader pickup in business activity as measured by S&P Global’s preliminary Purchasing Managers’ Index (PMI). The services PMI climbed to 56.8 from 54.6 in July, exceeding expectations of a decline to 54.0 and marking the highest reading since December 2024.
The composite PMI, which combines services and manufacturing, rose to 56.0 from 54.5, reaching its strongest level since April 2022. The manufacturing PMI, however, slipped to 53.2, a five-month low down from 53.9 in July, according to the survey released on Friday.
Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that U.S. business activity is expanding robustly, with firms reporting the fastest production growth in over four years during the third quarter. Survey data suggests annualized economic growth could approach 3.0% in the third quarter, up from the 1.5% pace recorded in the second quarter.
The manufacturing slowdown was attributed to reduced inventory building and supply disruptions linked to the U.S.-led conflict with Iran. In contrast, the July services PMI had been boosted by spending tied to the World Cup and celebrations for the 250th anniversary of U.S. Independence Day, factors that did not recur in August.
A reading above 50 indicates expansion in activity, with the latest figures signaling sustained momentum across the U.S. economy despite pockets of weakness in manufacturing supply chains.
