In August, U.S. business activity accelerated, driven by a revitalized manufacturing sector experiencing its strongest order growth in 18 months, as revealed by a purchasing managers survey on Thursday.
The S&P Global Flash U.S. Composite PMI Output Index, which monitors manufacturing and services sectors, rose to 55.4 this month, marking the highest level since December, up from 55.1 in July. A score above 50 indicates expansion in the private sector.
“August’s robust PMI reading suggests that U.S. businesses have had a solid third quarter so far,” stated Chris Williamson, chief business economist at S&P Global Market Intelligence. “The data aligns with an economy expanding at a 2.5% annualized rate, an increase from the 1.3% average growth seen in the year’s first two quarters.” This boost was primarily due to the manufacturing sector, where the flash PMI jumped to 53.3, the highest since May 2022, from 49.8 in July, surpassing economists’ predictions for continued contraction.
Manufacturing benefited from a surge in new orders, reaching the highest level since February 2024.
Conversely, the services sector slightly decreased to 55.4 from 55.7 in July. Reuters economists had anticipated the services PMI to drop to 54.2.
The survey’s measure of input prices paid by businesses rose to a three-month peak of 62.3 from 61.3 last month, with both sectors reporting increased costs, noting President Donald Trump’s tariffs as a major factor.
“Both manufacturing and service sectors reported the sharpest rise in input prices since May and the second-largest increase since January 2023,” the report stated. “Rates of increase accelerated across both sectors.” Prices charged by businesses for goods and services reached a three-year high of 59.3, indicating that companies are increasingly transferring higher tariff costs to consumers.
Employment also saw improvement, with the composite employment index for manufacturing and services rising to 52.8, the highest since January, from 51.5 in July.
