- Prior month 49.8
- Manufacturing PMI 53.3 v 49.5 estimate
- Services PMI 55.4 versus 54.2 estimate.
- Composite PMI index 55.4 versus 55.1 last month
Details from S&P Global
Output and demand
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Composite PMI Output Index rose to 55.4 in August vs 55.1 in July, an eight-month high.
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Output has now grown for 31 consecutive months; back-to-back expansions strongest since spring 2022.
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Services: Activity dipped slightly from July’s high, but sales growth hit steepest pace since Dec 2023; exports returned to growth.
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Manufacturing: Output surged, strongest monthly rise since May 2022; new orders hit highest since Feb 2024, with exports at a 15-month high.
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Data consistent with economy growing at 2.5% annualized rate, vs 1.3% in H1 2025.
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Strong demand created backlogs of work not seen since early 2022; finished goods stockpiling rose at a record pace.
Prices
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Tariffs were key driver of higher costs in August.
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Input prices rose at the steepest rate since May 2023; second-largest since Jan 2023.
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Manufacturing cost rise was second-highest since Aug 2022; services saw second-largest since June 2023.
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Selling prices rose at the fastest pace since Aug 2022.
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Service sector inflation hit a one-year high; goods inflation cooled slightly but stayed among the highest in three years.
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Inflation pressures now at a three-year high, suggesting CPI will rise further above Fed’s 2% target.
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PMI signals tilt toward rate hikes, not cuts.
Capacity and employment
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Employment rose for a sixth straight month, fastest since Jan 2025.
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Service sector hiring: fastest in seven months.
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Manufacturing hiring: highest since March 2022.
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Job gains driven by rising backlogs; uncompleted orders rose at pace unsurpassed since May 2022.
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Backlogs in services matched steepest rate since May 2022; manufacturing backlogs strongest in 3+ years.
Future sentiment
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Business confidence rose to a two-month high, though still below early 2025 and long-run average.
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Service sector sentiment improved from July but remains weaker than May–June and far below start of year levels.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:
A strong flash PMI reading for August adds to signs that US businesses have enjoyed a strong third quarter so far. The data are consistent with the economy expanding at a 2.5% annualized rate, up from the average 1.3% expansion seen over the first two quarters of the year.
Companies across both manufacturing and services are reporting stronger demand conditions, but are struggling to meet sales growth, causing backlogs of work to rise at a pace not seen since the pandemic-related capacity constraints recorded in early 2022. Stock building of finished goods has also risen at a survey record pace, linked in part to worries over future supply conditions. While this upturn in demand has fueled a surge in hiring, it has also bolstered firms’ pricing power. Companies have consequently passed tariff-related cost increases through to customers in increasing numbers, indicating that inflation pressures are now at their highest for three years.
The resulting rise in selling prices for goods and services suggests that consumer price inflation will rise further above the Fed’s 2% target in the coming months. Indeed, combined with the upturn in business activity and hiring, the rise in prices signaled by the survey puts the PMI data more into rate hiking, rather than cutting, territory according to the historical relationship between these economic indicators and FOMC policy changes.
This article was written by Greg Michalowski at investinglive.com.