US private-sector output growth hit a 52-month high amid a surge in services activity, while price pressures eased and employment rose sharply, S&P Global's (SPGI) flash purchasing managers' index showed Friday.
The composite output index increased to 56 this month from 54.5 in July, marking the fastest growth since April 2022, the data provider said. The consensus was for a 54 reading in a survey compiled by Bloomberg. The 50-point mark separates expansion from contraction.
The measure for services output reached a 20-month high of 56.8 in August, compared with 54.6 last month, while Wall Street projected a reading of 54. The manufacturing PMI hit a five-month low of 53.2 versus the consensus for an unchanged reading of 53.9.
"The survey data for the third quarter are currently pointing to annualized growth approaching 3%, up solidly from the 1.5% pace seen in the second quarter," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "Growth momentum has meanwhile shifted from manufacturing to services between the second and third quarters."
Services sector activity recovered from a "sluggish" rate seen in the second quarter, while the manufacturing weakness this month was partly due to reduced inventory building and supply delays, the report showed.
Price pressures "moderated" in August, especially in terms of selling price inflation, S&P said. Input cost inflation remained high amid elevated energy prices. Firms added jobs this month at the fastest rate since the start of last year, the report showed.
"Supply delays were again reported in August to one of the greatest extents seen over the past four years, clearly constraining output in many companies," Williamson said. "Price pressures, while fading, also remain elevated and prone to renewed upward pressures should energy prices rise again."
Crude oil price benchmarks were headed for their second consecutive weekly gains Friday amid renewed tensions between the US and Iran, as a 60-day ceasefire expired Monday without a final deal.
Business growth expectations reached a nine-month high in August, improving for a third month in a row, with confidence in both manufacturing and servicing picking up, according to S&P.
The improved outlook was due to "a combination of order book backlogs, rising customer enquiries, expansion plans, and an easing of concerns over the economic impacts of tariffs and the war in the Middle East," the data provider said Friday.
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