The S&P Global final U.S. services purchasing managers' index (PMI) rose to 54.6 in July, compared with a preliminary reading of 53.6 and 51.2 previously.

The composite index also improved, coming in at 54.5 versus 53.6 in the flash estimate and 51.9 previously.

S&P Global said the rate of job creation was the strongest in eight months. It also said overall costs were rising at the fastest pace since May 2025, while charge inflation remained above its long-run trend and accelerated to a 14-month high in July.

The ISM services report is due at the top of the hour and is expected to show a reading of 54.5, up from 54.0 previously. The figures are being watched for signs of upside risks, which could support the U.S. dollar and weigh on stocks, with particular attention on the inflation components. That makes the services readings relevant not just for the growth outlook but also for expectations around how persistent price pressures may be in the broader economy.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the final July PMI was stronger than the earlier flash estimate, signaling an acceleration in economic growth at the start of the third quarter. He said the PMI points to GDP rising at an annualized rate of 2.3%, after a 1.5% increase indicated for the second quarter, and added that business optimism climbed to its highest level since last November.

Williamson also cautioned that some of the improvement may have been temporary. He said the biggest increase in demand in July came from consumer-facing service providers, where spending surged at a rate not seen in more than four years, linked to the FIFA World Cup and U.S. Independence Day events.

He added that businesses also benefited in early July from reduced geopolitical uncertainty and lower oil prices. However, with hostilities in the Gulf escalating later in the month, he said the geopolitical environment is now likely to act as a headwind to growth while adding to already elevated price pressures.