US PMI Surveys Signal Growth Rebound In Q3, Strongest Among Global Peers

Following the mixed/weak Manufacturing PMI survey data earlier in the week, today's Services PMIs were expected to be just as mixed with S&P Global higher and ISM flat.

• S&P Global Services PMI for August rose from 54.6 to 56.5 (below the preliminary 56.8 but still up bigly) - the highest since Dec 2024

• ISM Services PMI for August rose from 54.1 to 55.4 (better than the 54.1 exp) - the highest since Feb 2026

These improvements come as hard data languishes...

The S&P Global US Composite PMI recorded 56.0 in August, up from 54.5 in July and pushed the index to a 52-month high. A stronger rise in services activity coincided with sustained, albeit slower growth in manufacturing. This puts the US economy ahead of the rest of the world based on survey data...

“Business activity growth across the private sector accelerated in August, marking a clear shift in gear for the US economy," said Usamah Bhatti, Economist at S&P Global Market Intelligence.

Survey data now point to GDP growing at an annualized rate of 3.0% in the third quarter, up solidly from the meagre 1.5% recorded in the previous quarter...

Alongside a renewed improvement in new business intakes, growth appears likely to continue at least in the near term.

“There was also a welcome acceleration in jobs growth during August, with employers becoming more confident across both the manufacturing and service sectors.

Job creation was commonly linked to efforts to keep pace with demand requirements, but also to prepare for future growth as concerns regarding the conflict in the Middle East started to fade."

That said, Bhatti points out that "supply delays remained elevated, notably for manufacturers, while aggregate price pressures also stayed above their historical average."

Growth momentum appears to have shifted from manufacturing to services, with the latter seeing the pace of expansion surge to the highest since the end of 2024.

"Manufacturing growth, meanwhile, was unchanged as both output and new orders rose at weaker rates."

Is strong growth and elevated prices enough to trigger Warsh to pull the trigger in two weeks? Waller's comments this morning dampened the market's enthusiasm for a hike.