Workers assemble steel tool chests at a manufacturing facility in Sedalia, Missouri. Phorographer: Alex FLynn/Bloomberg.
U.S. manufacturing is expanding at the fastest rate in more than three years on stronger demand, which is also fueling sustained inflationary pressures.
The S&P Global flash August factory purchasing managers index (PMI) rose 3.5 points to 53.3, the highest since May 2022, according to data released today. Figures above 50 indicate growth. The pickup in the manufacturing gauge helped lift the composite PMI, which also includes a measure of services, to the highest level this year.
“Companies across both manufacturing and services are reporting stronger demand conditions but are struggling to meet sales growth,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
Measures of factory output and backlogs of work both climbed to match a mid-2022 high. A measure of orders advanced to the highest reading since February 2024. As a result, manufacturers stepped up hiring. Employment growth was the strongest since March 2022, according to the survey.
The figures point to resilient demand and optimism about the U.S. economy at the start of the second half of the year. At the same time, the boost in import taxes drove up the composite index of sales prices, which matched a three-year high. The report indicated that consumers are bearing the brunt of tariffs, as the group’s measure of prices charged by service providers increased to a three-year high. “While this upturn in demand has fueled a surge in hiring, it has also bolstered firms’ pricing power. Companies have consequently passed tariff-related cost increases through to customers in increasing numbers,” Williamson said.
A gauge of business activity in services eased slightly but remained healthy. The sales indicator grew at the fastest pace this year, while a gauge of outstanding business remained the strongest since May 2022.
Meanwhile, concerns about future supply conditions due to trade policy uncertainty drove a measure of factory inventory of finished goods to the highest in data back to 2007.
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