Economic Buzz: US service sector growth remains positive in August

The S&P Global US Services PMI Business Activity Index posted 54.5 in August, down from 55.7 in July and the earlier 'flash' reading of 55.4 to signal slower, but nonetheless still marked, growth of US service sector output. Higher levels of business activity have now been recorded on a continuous monthly basis since February 2023. Moreover, August?s index reading was the second highest of 2025 so far.

The US service sector continued to expand in August, despite growth softening slightly since July. A marked uptick in new business volumes helped to support the latest increase in activity, meaning service providers were also suitably encouraged to add to their payroll numbers.

That was despite confidence in the outlook remaining relatively subdued and falling to its lowest level in four months amid ongoing worries over tariffs and associated uncertainty.

Alongside reports of higher employee costs, tariffs also served to push up service providers? operating expenses at an elevated pace. Selling prices were increased steeply in response.

Underpinning the latest rise in activity were increased new business volumes. Like activity, growth was the second highest of the year to date.

Further rises in overall activity and new business encouraged service providers to add to their payroll numbers, with latest data signaling an increase in staffing levels for a sixth month in a row.

The S&P Global US Composite PMI recorded 54.6 in August, down slightly on July?s 55.1. Slower growth primarily reflected a softening of US service sector expansion as, in contrast, manufacturing production rose to the greatest degree since May 2022.

Total new business volumes increased at the strongest rate of the year so far, and this translated into another solid round of employment growth. Price pressures remained elevated, despite easing slightly since July.

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