Flash US PMI signifies faster growth and recruitment, but also shows inflation driven by tariffs
US business activities grew at the fastest level recorded so far this year in August, according to the initial ‘flash’ PMI data, adding signs of a strong third quarter. Employing also taken, with the creation of employment reaching one of the highest rates seen over the past three years because the company reported the biggest buildup in work that was not completed since May 2022.
Business trust in increased prospects but remains far weaker than what was seen at the beginning of the year because the company reported ongoing concerns about the impact of government policies, especially in relation to tariffs.
The tariff is once again quoted as a major cause of higher costs, which in turn is fed to the most steep increase in the average selling price recorded over the past three years. Prices increase in tariff increases for goods and services, signaling consumer price inflation in the next few months.
Faster growth and stronger work advantages in August
PMI Flash reading is strong for August adding signs that the US business has enjoyed a strong third quarter so far. The PMI US Global Global Composite Output Index Global rose to the highest eight months in August, up from 55.1 in July to 55.4, according to the ‘flash’ reading (based on around 85% of the usual survey response). Output has now grown continuously for 31 months, with the last two months to see the strongest back-to-back expansion since the spring 2022.
This data is consistent with the economy that developed at an annual level of 2.5%, up from an average expansion of 1.3% which was seen for the first two quarters of this year.
Strong expansion which is reported in the service economy, although with the growth of business activities slightly down from the highest year-to-July. However, the growth of new orders in this sector has collected speeds to register the sharpest increase in demand since last December, assisted by simple returns for the export growth of the service sector.
The ongoing service sector expansion is accompanied by the acceleration of real output growth in the manufacturing sector to the fastest since May 2022. The entry flow of new orders in the goods producing sector has also increased, reaching the highest since February 2024 on the back of the back which increased in 15 months.
While companies in both manufacturing and services report stronger demand conditions, there are signs that many are struggling to meet sales growth. This has caused the job backlog to increase at an invisible speed due to the capacity related to the pandemic recorded in early 2022.
Work rises for the sixth month in a row because the company tries to meet demand and reduce job savings. The level of employment creation has reached the highest since January (and one of the highest rates seen for more than three years). Service providers take staff at the fastest speed since the beginning of the year while the profit of factory work has reached the highest since March 2022.
Calm hope
In the future, after going down in July, company expectations about output in the next year while rising to the highest two months in August, although it remains below which is seen at the beginning of the year and below the long-term average survey.
The service sector sentiment was revived part of the decline in July but continued to run weaker than what was seen in May and June, and far below the level seen at the turn of the year, most of them related to the ongoing concern regarding government policy.
While support from policies such as tariffs helps to lift manufacturing optimism in August to good levels above the average post-PAN-KEME, optimism in the sector producing goods below the recent height, reflects concerns about higher costs and the impact of geopolitical uncertainty, especially in relation to international trade and supply chains.
Rates encourage stock construction and price inflation
Stock buildings also increase to the level of survey records, some are linked to concerns about future supply conditions.
While this increase in demand has triggered the recruitment of the resurrection, he has also strengthened the strength of company pricing. The company as a result has passed the increase in costs related to tariffs through customers in increasing amounts, indicating that inflationary pressure is now the highest for three years.
The increase in the selling price of goods and services produced shows that consumer price inflation will rise further above the 2% Fed target in the coming months.
Combined with an increase in business activities and recruitment, the price increase marked by a survey placing PMI data is more into the level of hiking – rather than cutting the area in accordance with the historical relationship between this economic indicator and changes in FOMC policy.
Source: Platts
