US Economy Surprises; Fed Expectations Shift Again
US business activity saw its fastest acceleration in over four years this August, driven by rising demand, an improving economic outlook, and a surge in hiring. The S&P Global Flash US Composite PMI rose to 56.0, its highest level since April 2022. A reading above 50 indicates that the business sector remains in an expansion phase.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that US business activity is regaining strong momentum, with output growth hitting its fastest pace in more than four years. Companies are also ramping up hiring as concerns regarding the impact of tariffs and Middle East conflicts begin to subside.
The strengthening was primarily driven by the services sector. The services activity index rose to 56.8, matching its highest level since March 2022. Meanwhile, the manufacturing sector continued to grow—with an index reading of 53.2—though it slowed to a five-month low due to raw material supply constraints and distribution chain disruptions.
The data also revealed that US companies increased their workforce at the fastest pace since January 2025. Job gains occurred in both the manufacturing and services sectors, with services acting as the primary driver of employment growth.
On the inflation front, price pressures are beginning to ease. Corporate input costs rose at their slowest pace since the onset of the Iran conflict, while future output expectations reached a nine-month high. However, risks stemming from the Middle East remain a concern, as potential supply disruptions and rising energy prices could reignite inflation.
Newsmaker Analysis: Strong US PMI data signals that the economy remains resilient despite high interest rates. This situation could put pressure on Federal Reserve rate-cut expectations, given the continued solidity of economic and employment growth. For the US dollar, this data could serve as a positive catalyst; conversely, gold faces potential downward pressure if Treasury yields rise again as the market prices in the likelihood of the Fed maintaining a tight policy stance. (arl)
Source: Newsmaker.id
