US S&P Global PMI likely to signal modest business activity slowdown in August
- The S&P Global flash PMIs for August are expected to show a modest downtick from July levels.
- Market participants will pay close attention to employment and inflation-related subindexes.
- EUR/USD trades within familiar levels amid the absence of a clear catalyst.
S&P Global will release on Thursday the August flash Purchasing Managers' Indices (PMIs) for the United States (US), surveys of top private sector executives, which provide an early indication of the business sector’s economic health.
Ahead of the announcement, market participants anticipate that the August flash Manufacturing PMI will tick lower, to 49.5 from the current 49.8. The services index is foreseen at 54.2, easing from the 55.7 posted in July. Investors also project that Composite PMI will print at 53.
S&P Global separates manufacturing activity from services activity, reporting them separately through the Manufacturing PMI and the Services PMI. Additionally, they present a weighted combination of the two, the Composite PMI. Generally speaking, a reading of 50 or more indicates expansion, while below the threshold, the indexes indicate contraction.
The report has two versions, a preliminary estimate and a final revision, which comes around two weeks later alongside official figures. Finally, it is worth noting that each report analyses everything from production and export patterns to capacity utilisation, employment, and inventory levels, offering some of the earliest signs of the economy's direction.
The July Composite PMI was confirmed at 55.1, better than the 52.9 posted in June. The services sector expanded while the manufacturing one stood in contraction territory, with the indexes resulting at 55.7 and 49.8, respectively.
“A jump in US business activity was witnessed via the S&P Global PMI data for July. Growth hit the highest seen so far this year. However, the upturn was uneven, being fueled largely by tech and financial services, with large swathes of the economy struggling to grow amid heightened uncertainty. Business confidence in the year ahead has sunk to one of the lowest levels seen over the past three years amid concerns over government policy and the impact of tariffs, the latter of concern in particular in relation to inflation,” Chief Business Economist Chris Williamson stated following the July release.
What can we expect from the next S&P Global PMI report?
The anticipated decline in August PMIs should have no significant impact on the Greenback, and hence on financial markets, as the poor performance of the manufacturing sector is no news. However, lower-than-expected figures could have a negative impact on the market’s sentiment. Poor figures could also boost concerns about the US economic progress and lift the odds for steeper interest rate cuts before year-end. However, such a chance is quite limited as the figures need to be near terrible, an unlikely scenario.
An outcome in line with expectations would highlight the subindexes of the PMIs reports, particularly related to employment and input and output prices, as market players will be looking for additional clues towards the Federal Reserve (Fed) September monetary policy meeting.
Finally, better-than-anticipated figures above the 50 threshold would likely boost demand for the US Dollar (USD), indicating a healthy economy without significantly affecting the odds for a September 25 basis points (bps) interest rate cut.
When will the August flash US S&P Global PMIs be released and how could they affect EUR/USD?
The S&P Global Manufacturing, Services and Composite PMIs reports will be released at 13:45 GMT and are expected to show that US business activity continued to expand in August, but at a slower pace than the previous month.
Ahead of the release, the US Dollar seesaws between familiar levels with a modest upward bias, nothing relevant.
Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair has been trading in a well-limited range for almost two weeks, finding buyers at around the 1.1600 mark and quickly reversing after peaking past the 1.1700 threshold. A recent high at 1.1730 provides critical resistance, as gains beyond the latter would probably open the door for a test of the 2025 yearly high at 1.1830. An interim resistance could be found at around 1.1770.”
Bednarik adds: “The overall risk skews to the upside, yet a near-term slide is not out of the picture. The weekly low at 1.1622 provides immediate support ahead of 1.1590, where EUR/USD bottomed on August 11. A fall below the latter could lead to a test of the 1.1550 area.”
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Economic Indicator
S&P Global Manufacturing PMI
The S&P Global Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The data is derived from surveys of senior executives at private-sector companies from the manufacturing sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity in the manufacturing sector is generally declining, which is seen as bearish for USD.
Read more.Next release: Thu Aug 21, 2025 13:45 (Prel)
Frequency: Monthly
Consensus: 49.5
Previous: 49.8
Source: S&P Global