U.S. Services Just Hit Their Strongest Growth in Nearly Two Years

U.S. services activity accelerated sharply in August, helping offset slower manufacturing growth and giving the economy a stronger third-quarter signal than many investors expected.

01 Event

S&P Global’s flash services PMI rose to 56.8, the highest since December 2024. That pushed the Composite Output Index to 56.0, its strongest reading since April 2022.

02 What Changed?

Services are doing more of the work. Manufacturing still expanded, but its PMI slowed to 53.2. New services business and hiring strengthened, showing that demand remains relatively healthy in the much larger services side of the economy.

03 Why It Matters

Services account for most U.S. economic activity, so strong growth there can keep GDP expanding even when factories cool. S&P Global said the survey data suggest third-quarter growth could run near twice the second quarter’s 1.5% annualized pace.

04 What It Means for You

A stronger economy can support jobs and corporate earnings, but it can also make interest-rate decisions more complicated if inflation remains elevated. Consumers should therefore watch both growth and prices rather than assuming stronger activity automatically means easier financial conditions.

05 Numbers + Context

Services PMI: 56.8, up from 54.6 in July. Composite Output Index: 56.0, up from 54.5. Manufacturing PMI: 53.2. Readings above 50 indicate expansion.

Source: Reuters, August 21, 2026.

06 Earnyx Takeaway

The economy does not need every sector to accelerate at once. Right now services are carrying more of the load. The key question is whether that strength can continue without creating enough inflation pressure to keep borrowing costs higher for longer.