Dive Brief:
- U.S. business activity surged in August to the highest level in 52 months as a rebound in services more than offset a slowdown in manufacturing caused by supply delays and cuts in inventory, S&P Global said Friday.
- A purchasing managers index combining services and manufacturing rose to 56 from 54.5 in July as companies, responding to rising demand, added jobs at the fastest pace since early 2025, S&P Global said. Expectations for business growth hit a nine-month high.
- “U.S. business is booming,” S&P Global Chief Business Economist Chris Williamson said in a statement. “The service sector is now playing a key role in driving a sustained U.S. expansion, underscoring a dependency on consumer spending and financial services growth.”
Dive Insight:
The S&P purchasing manager survey aligns with other recent reports indicating solid economic growth.
A measure forecasting future growth rose last month for the first time in four years, spurred by improved credit markets, rising stock prices and gains in new orders for manufactured goods and other data indicating growing demand, The Conference Board said Thursday.
The Conference Board’s Leading Economic Index increased 0.2%, recovering from a 0.1% decline in June. The index’s six-month growth rate edged up 0.2% after falling 1.3% during the previous six months, The Conference Board said.
A slump in consumer expectations for business conditions was the only LEI component that declined last month, The Conference Board said.
Gloomy consumer expectations may slow economic growth in coming months, Justyna Zabinska-La Monica, the Conference Board’s senior manager for business cycle indicators, said in a statement.
Consumer sentiment fell 8% this month after two straight months of improvement, according to Joanne Hsu, director for surveys of consumers at the University of Michigan. Consumer expectations for business conditions fell 11% for the short run and 17% for the long run, she said.
Households spent less last month at auto dealerships, furniture stores, restaurants and other retailers. Retail sales in July fell 0.6%, well short of forecasts, after a 0.2% increase in June, the Census Bureau reported on Aug. 14.
U.S. consumers will likely reduce spending during the rest of this year as the stimulus from tax refunds fades, according to Goldman Sachs economists.
Inflation-adjusted consumer spending will likely grow between 1% and 1.5% during the second half of 2026 compared with 1.8% during the first half of the year, Goldman Sachs said Friday in a note.
At the same time, strong business investment and high equity prices will likely help fuel overall economic growth, Goldman Sachs said, forecasting 2.1% gross domestic product growth this year, the same rate as last year.
