U.S. manufacturing grew at its fastest pace in over three years this August, marking a major rebound for the sector and fueling the strongest overall business activity of 2025, according to new data from S&P Global. The flash manufacturing PMI rose sharply to 53.3, up from 49.8 in July — its highest reading since May 2022.
The surge was driven by increased output and new orders, pushing work backlogs to levels not seen since mid-2022. The data also showed the sharpest uptick in factory hiring in more than two years, signaling renewed employer confidence and demand.
S&P Global’s broader composite index, which includes both manufacturing and services, ticked up to 55.4 from 55.1, reflecting the eighth consecutive month of private-sector expansion. The report suggests the economy is growing at a 2.5% annualized rate in the third quarter — a noticeable acceleration compared to earlier in the year.
The service sector also posted strong gains, with new business growth reaching its highest level of 2025. Employers across industries reported continued staffing growth as they worked to meet rising demand.
Inflation, however, is showing signs of re-acceleration. Companies cited higher input costs, many tied to tariffs, and raised prices accordingly. The index tracking selling prices reached its highest point in three years, driven largely by service providers.
In anticipation of potential disruptions, manufacturers also built up inventories. Finished goods stockpiles reached their highest level since tracking began in 2007. Companies attributed the build-up to trade-policy uncertainty and lingering supply-chain risks.
The data paints a picture of a revitalized manufacturing sector helping to drive broader economic momentum — but one that is also facing renewed inflationary pressure and policy-driven uncertainty.
