The rate of global economic expansion accelerated for the fourth month in a row in August, with output rising at the quickest pace since June 2024. However, business confidence dipped to one of its lowest levels since the 2020 pandemic, stymieing jobs growth and placing downside risk to output growth during the months ahead.

The J.P.Morgan Global Composite PMI Output Index, produced by J.P.Morgan and S&P Global in association with ISM and IFPSM, posted 52.9 in August, up from 52.5 in July. The headline index has signalled expansion in each of the past 31 months.

August saw the global service sector outperform manufacturing for the sixth successive month. Growth of services business activity remained close to July's seven-month high, with expansions signalled across the business, consumer and financial services categories. The steepest rate of increase was at financial service providers and the slowest in the consumer services sector.

There were renewed signs of vigour from the manufacturing sector, with production and new order volumes both returning to growth. Output expanded across the consumer, intermediate and investment goods industries, all of which had seen contractions during the prior survey month.

Regional growth patterns

India again registered the strongest growth overall in August. The US continued to outperform the major developed economies, despite seeing growth slow slightly during the latest survey month.

Faster expansions were signalled in the UK and Japan in August, as well as further modest growth in the eurozone. The economic upturn in mainland China also accelerated, while downturns moderated in both Russia and Brazil.

The level of new orders rose at the quickest pace during the year so far in August, albeit subdued by a further decrease in intakes of new export business. Growth of total new orders contributed to a further marginal rise in backlogs of work, the third increase in as many months.

Higher levels of both new work and outstanding business encouraged firms to take on additional staff during August. Employment increased for the fourth successive month, although the rate of job creation has remained marginal throughout this sequence.

Service sector employment rose for the sixth month in a row while manufacturing headcounts increased following a 12-month sequence of declines. Of the sub-sectors covered by the survey, four (intermediate goods, investment goods, business services and financial services) raised employment and two (consumer goods and consumer services) registered job losses.

Future optimism wanes further

Business expectations about the year ahead slipped to one of the lowest levels since the 2020 pandemic. Surveyed companies often cited geopolitical uncertainty and/or US trade policy as the main factors stymieing confidence.

August data signalled a further increase in average input prices, with the rate of inflation little-changed compared to recent months. Service sector costs continued to rise at a faster pace than manufacturing purchase prices.

The rate of increase in average output charges was also broadly unchanged in August. Although service providers registered a steeper rise than manufacturers, the former saw selling price inflation ease whereas the latter saw a slight acceleration. All six of the sub sectors covered by the survey saw both input costs and output prices increase during the latest survey month.

Banking sector sees strongest expansion in August

Meanwhile, the latest S&P Global Sector PMI data showed 18 of the 21 monitored sectors in expansion mode, the most in nearly one year. Metals & Mining and Healthcare Services were the only two sectors to record lower output, while Chemicals signalled no change from July.

The banking sector led the upturn in August, recording the strongest upturn in 51 months and one that was substantial overall. The expansion was supported by robust new business inflows, where the growth rate was its highest in four-and-a-half years. At the other end of the scale, Metals & Mining retained the bottom spot for a fourth consecutive month (with respect to output). The rate of contraction was the least marked in five months, however, and only modest overall.

At the broad sector level, six of the eight categories registered growth in August, with Technology, Financials and Industrials retaining the top spots, respectively. Healthcare dropped back to the bottom, amid a subdued performance in its component sectors. Meanwhile, Basic Materials production volumes nearly stabilised.

There were some signs of recovery in demand conditions, as only four of the 21 monitored sector recorded lower order books. Where reductions were recorded, they were only mild.

On the jobs front, Financials saw some the strongest expansions in workforce numbers of all 21 monitored sectors, with all four constituent sectors ranking in the top five (joined with Telecommunication Services). Turning to prices, Healthcare Services and Tourism & Recreation faced substantial rises in input costs, with inflation the joint-strongest of the 21 monitored sectors. The data also found that input costs facing Banks rose at the softest rate of the year so far and at the weakest pace of the 21 sectors monitored by the survey.

Outlook: momentum meets fragility

The August PMI data paint a mixed picture. On the surface, the global economy is enjoying its strongest run of growth in over a year, with both services and manufacturing contributing to the upturn. Employment is slowly recovering, and sectoral breadth has widened to include industries that were previously in contraction.

Yet optimism is fading. Business confidence is slipping toward pandemic-era lows, and the drag from trade tensions and tariffs continues to weigh on export demand. Inflationary pressures, though stable, remain entrenched, limiting room for central banks to pivot too quickly toward looser policy.

For CFOs and treasurers, the survey highlights both opportunities and risks. Financial services are experiencing strong growth, offering scope for expansion and financing activity. But weaker sentiment, stubborn inflation, and ongoing policy uncertainty suggest caution is warranted.

The global economy has pulled off a resilient performance so far in 2025, but sustaining that momentum into 2026 will require more than just domestic demand. With business confidence fragile, trade tensions unresolved, and inflation still elevated, the road ahead looks uneven. Firms that can balance defensive risk management with selective growth investments will be best positioned to navigate what remains a volatile global landscape.