The U.S. economy gained momentum in August, driven by a sharp rebound in the services sector, according to preliminary data from S&P Global. The composite purchasing managers’ index (PMI) climbed 1.5 points to 56.0, marking the highest reading since April 2022 and exceeding market expectations.
The expansion was led by the services segment, where the PMI rose to 56.8—its strongest level since December 2024—reflecting robust demand across transportation, healthcare and business services. In contrast, the manufacturing PMI fell to 53.2, a five-month low, despite remaining in expansion territory. S&P Global attributed the divergence to weaker inventory accumulation and supply chain disruptions, including delays linked to regional geopolitical tensions.
On an annualized basis, the August data point to third-quarter GDP growth of nearly 3%, more than double the 1.5% pace recorded in the prior quarter. Chris Williamson, chief economist at S&P Global, described the economy as "booming," though he cautioned that persistent cost pressures continue to weigh on margins.
Average cost increases in the third quarter remain elevated compared with the second quarter, S&P Global noted, with input price inflation still running above pre-pandemic averages. Williamson warned that while the pace of price growth has moderated slightly, "price pressures remain high." The data underscore a U.S. economy increasingly reliant on services for sustained expansion, even as industrial activity shows signs of cooling.
