US Flash Composite PMI (August)

What it means

The PMI surveys purchasing managers to gauge whether business activity is expanding (above 50) or contracting (below 50). August's composite reading jumped from 54.5 to 56.0, well above the 54.0 consensus, marking the fastest expansion since 2022. The gain was driven by services, which surged to 56.8 (versus 54.6 previously and 54.0 expected), while manufacturing cooled to 53.2, missing the 53.9 forecast though still in expansion territory.

What it moves

Stronger-than-expected growth reduces the urgency for the Fed to cut rates aggressively, which tends to support the dollar and push Treasury yields higher. The effect on stocks is mixed: better earnings prospects compete with dimmer rate-cut hopes. As the latest read on the world's largest economy, the data also sets a tone for global risk sentiment.

Affected markets

• US Dollar ↑ — Strong growth data reduces urgency for aggressive Fed rate cuts, supporting the dollar
• US Treasury yields ↑ — Robust activity data pushes back on rate-cut expectations, lifting yields
• US equities → — Growth beat is positive for earnings but tempers hopes for faster rate cuts, creating a mixed reaction
• Global risk assets ↑ — A resilient US economy supports global growth sentiment and risk appetite