The July flash S&P Global PMI data painted a mixed picture of the US economy at the start of the third quarter, with manufacturing easing to a four-month low while services and composite readings posted their strongest readings in eight months.

Because PMI surveys track whether business conditions are improving or worsening versus the prior month, the split between a softer factory reading and stronger services reading points to uneven momentum rather than a broad slowdown. The composite index is especially closely watched because it combines manufacturing and services activity into a single read on private-sector output.

Headline PMI Readings

Flash manufacturing PMI for July came in at 53.8, below the 54.3 consensus estimate and down from 53.9 in the prior month. This marked a four-month low but remained above the 50 threshold that separates expansion from contraction.

Flash services PMI for July rose to 53.6, well above the 51.5 expected and up from 51.2 in the prior month. This was the strongest services reading since November 2025.

Flash composite PMI for July climbed to 53.6, up from 51.9 the previous month and also the strongest since November 2025.

Economist Commentary

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:

"US businesses reported a good start to the third quarter, the 'flash' PMI survey data broadly consistent with GDP growing at an annualized 2.0% against a 1.2% pace signalled for the second quarter. The month saw an encouraging return to hiring by companies, with employment rising for the first time in three months. However, some of this improvement may prove shortlived as July saw hospitality spend boosted by the FIFA World Cup and USA 250 anniversary activities. It was also worrying – though not unexpected – to see manufacturing growth weaken as some of the stock building seen in prior months showed signs of fading. Instead, July saw a concerning intensification of supply chain delays and accompanying renewed upturn in price pressures, constraining growth and subduing demand. Events over recent days in the Middle East will have only further exacerbated these supply chain and price worries and raise downside risks to the near-term outlook for the economy, hinting that July's upturn may not be the start of an improving trend."

S&P Global Survey Details

Future Sentiment

Business confidence improved to an eight-month high overall. Services optimism climbed to its strongest level since September, helped by lower energy prices and improving consumer spending prospects. Manufacturing confidence slipped to its weakest since October, weighed down by softening demand, global trade concerns, tariffs, geopolitical uncertainty, and elevated costs.

Employment

Employment increased only slightly after two months of declines. Hiring remained cautious in both manufacturing and services. High costs and trade uncertainty limited hiring, with many firms choosing not to replace departing workers. Some businesses continued to report labor shortages.

Supply Chains

Supply chain disruptions worsened further. Manufacturing supplier delivery times lengthened at the fastest pace since August 2022, with delivery delays deteriorating for the eleventh consecutive month. Major drivers included shipping disruptions around the Strait of Hormuz, stockpiling of inventory, and tariff-related supply constraints.

Inflation & Prices

Input cost inflation accelerated to its highest level since May 2025. Higher costs reflected elevated energy prices, higher shipping costs, tariffs, and broad-based supplier price increases. Businesses passed more of those costs on to customers, with overall selling price inflation reaching its highest since August 2022. Services price inflation climbed to its highest level in nearly four years, while manufacturing price inflation remained elevated but eased somewhat.

The combination of stronger output indicators and renewed price pressure keeps attention on whether demand can continue to expand while supply delays and cost increases remain elevated. Upcoming final PMI readings and related employment and inflation data will help show whether July’s flash improvement is sustained beyond the one-off activity cited by S&P Global.