Business activity in the U.S. grew at its fastest pace in four years. This comes as a surprise to the market.

The U.S. Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 56 points, according to preliminary data released on August 21. As a result, economic growth in the country accelerated to its highest level since April 2022, Bloomberg notes .

The services sector was the driving force: activity in the sector reached 56.8 points, the highest level since March 2022, while the consensus forecast had predicted a drop to 53.8 points,according to Seeking Alpha.

The upturn in the services sector helped offset the slowdown in industrial activity caused by raw material shortages and supply disruptions. The manufacturing PMI fell to a five-month low of 53.2 points but remained in expansionary territory. Readings above 50 points indicate an expansion in business activity, according to Bloomberg. Wall Street, however, had expected more.

The report showed that companies have been adding staff at the fastest pace since the beginning of last year. “Job growth showed a long-awaited rebound in August as employers gained confidence amid fading concerns about the negative economic impact of tariffs and the conflict in the Middle East,” said Chris Williamson, chief economist for business research at S&P Global Market Intelligence.

Business expectations regarding future growth have reached a nine-month high. Price pressures have eased somewhat: average costs for companies in the manufacturing and services sectors rose at the slowest pace since February. However, S&P Global forecasts that prices could resume their upward trend if energy prices continue to rise.

This article was AI-translated and verified by a human editor