August’s flash Purchasing Managers’ Index (PMI) surveys have delivered a more resilient picture of global growth than the geopolitical backdrop might suggest, but the detail is becoming harder for finance teams to read through a single macro lens.

Business activity accelerated in the US and Japan, strengthened modestly in the eurozone, UK and India and remained in expansion in Australia. Yet the engines of that growth are changing. Services have regained momentum in the US and UK, while manufacturing is driving the strongest improvement in Japan and the eurozone. Inflation signals are splitting just as sharply, with selling-price pressure easing in the US and euro area but picking up in the UK and India.

Those differences complicate corporate forecasts for the remainder of 2026. Supply disruption remains widespread, inventory strategies are diverging from market to market and central banks are receiving very different signals on inflation, forcing finance teams to revisit assumptions for sales, working capital and borrowing costs.

Services seize the momentum

America supplied the clearest growth surprise. The S&P Global US Composite PMI rose from 54.5 in July to 56.0 in August, its highest since April 2022, with survey data pointing to annualised third-quarter growth approaching 3%.

Momentum has shifted decisively towards services. Business activity in the sector jumped to a 20-month high of 56.8, offsetting a slowdown in manufacturing output to 51.9, its weakest for 13 months. Both sectors still reported robust new orders, while employment rose at the fastest rate since January 2025.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “US business is booming, with firms reporting the fastest output growth for over four years so far in the third quarter as the expansion picked up further momentum in August.”

A similar rotation is visible in the UK. Its composite index increased to 52.5 from 52.2, the strongest since April, as services activity reached a six-month high of 52.8. Manufacturing output slowed markedly to 51.2, its weakest reading in five months.

Domestic spending helped UK order books improve, with total new business rising at the fastest pace since February. Export sales remained weak, however, while squeezed customer budgets and risk aversion continued to restrain demand.

India also relied more heavily on services. Its composite PMI edged up to 54.6 from July’s 52-month low of 54.3, but manufacturing output growth was the weakest in five years. Services staged a modest reacceleration after July’s sharp slowdown and accounted for the improvement in overall activity.

Pranjul Bhandari, chief India economist at HSBC, said: “Overall private sector output growth was broadly steady, helped by stronger services activity. Manufacturing growth weakened further in August, marking the softest improvement in five years.”

Across multinational groups, the shift towards services changes the mix behind headline growth. Consumer spending, financial services and domestic business activity are providing more support in the US and UK just as some of the inventory-led boost to factories begins to fade.

Factories revive elsewhere

Manufacturing tells a very different story in the eurozone and Japan. Euro area factory output rose at the fastest rate in four-and-a-half years, lifting the manufacturing output index to 53.4 and the headline manufacturing PMI to 52.8, its highest since May 2022. Germany led the improvement, with production expanding at the fastest pace since January 2022.

Demand also showed signs of broadening. Eurozone new orders rose at their strongest rate in 40 months and new export business, including trade within the currency bloc, expanded for the first time in four-and-a-half years. S&P Global linked the improvement partly to precautionary stock building, demand for AI-related technology and higher defence equipment spending.

Japan’s factory numbers were stronger still. Its manufacturing PMI rose to 55.1, while new manufacturing orders increased at the fastest pace since January 2018. Export orders recorded their strongest rise since the start of 2018, helping the composite PMI reach a six-month high of 53.4.

Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: “Furthermore, manufacturers recorded the steepest increase in total sales and overseas demand for over eight-and-a-half years, with robust pipelines of new work noted across semiconductor and AI-related industries.”

Australia sits closer to the other end of the manufacturing spectrum. Private-sector output remained in expansion at 52.5, but factory production slipped to 49.7 as staffing issues, delayed inputs and higher costs disrupted output. New manufacturing orders nevertheless improved and export demand returned to growth for the first time since March.

Across the surveys, there is little sign of a synchronised industrial cycle. Europe and Japan are seeing a meaningful factory revival while the US, UK and India lose some manufacturing momentum. That divergence will feed differently into sales expectations, procurement volumes and inventory requirements across international groups.

Inflation signals pull apart

Price data provide perhaps the clearest reason for finance teams to resist applying the same assumptions across markets. US input cost inflation slowed to its weakest since February, while average selling prices rose at the softest pace since last November. Services charge inflation fell to a ten-month low and manufacturing selling-price inflation to a six-month low. Energy, tariffs and supply constraints are still raising costs, but fewer businesses reported passing higher fuel and energy bills through to customers.

Eurozone inflation also softened. Input cost growth eased to its weakest since February and output-price inflation slowed for a third consecutive month to the lowest since March. Goods and services both contributed to the moderation.

Stronger growth means the ECB may still draw a hawkish conclusion from those numbers. Williamson said: “However, with the flash PMI signalling solid third quarter GDP growth, a return to hiring by companies for the first time this year, and inflation remaining elevated by historical standards, a hawkish bias is likely to be maintained and further imminent rate hikes cannot be ruled out.”

UK businesses are receiving the opposite cost signal. Input price inflation accelerated for the first time in four months, driven by fuel, transport, raw materials and staffing costs, while selling-price inflation also picked up. Higher food, technology and utility bills appeared in company responses.

Williamson said: “The data suggest the Bank of England looks likely to keep a hawkish bias but will stay cautious, holding off any rate hikes until the growth and inflation trajectories become clearer.”

Japan presents another variation. Input inflation eased to a five-month low but remained sharp by historical standards, while selling prices continued to rise at one of the fastest rates on record. Raw materials, fuel, energy, wages and a weak yen all featured in cost reports.

India moved in the other direction again. Input inflation softened to a seven-month low, yet firms increased charges at the fastest rate since April as they stepped up cost pass-through.

Australia may face the toughest immediate margin equation. Input price inflation accelerated after three months of moderation, particularly in manufacturing, while charge inflation slowed to its weakest since the start of 2026.

Eleanor Dennison, economist at S&P Global Market Intelligence, said: “With firms continuing to absorb a large part of elevated cost pressures, strain on margins will remain.”

Pricing power is therefore moving differently even where activity is expanding. Companies in India and Japan are passing more costs to customers, Australian firms are absorbing them and the US and eurozone are seeing broader price pressure cool. Revenue growth alone will reveal little about the margin outcome.

Supply disruption outlasts the stockpiling boom

Middle East disruption remains one of the few threads running through almost every survey, particularly through energy prices, freight and delivery times. Supplier delays in the US were among the most severe of the past four years. Raw material shortages constrained factory output and backlogs accumulated across both manufacturing and services. Yet manufacturers reduced precautionary inventory building and input purchases rose at their weakest rate this year, suggesting the earlier rush to build safety stocks is fading.

Eurozone factories are at a different stage. Precautionary stock building was still supporting production in August, even as supplier delivery times lengthened sharply. Input inventories nevertheless fell because purchased materials were being used to sustain output, while finished-goods stocks declined at their fastest rate since March.

Japanese manufacturers also faced marked delivery delays while continuing to increase purchases for higher production requirements. Australia reported longer waits for inputs alongside freight and commodity cost increases. Indian manufacturers slowed purchasing to the weakest rate in more than five years as production growth cooled.

Working capital consequences follow quickly from those choices. Reducing safety stocks can release cash, but doing so while supplier delays remain severe increases exposure to another disruption. Companies still building buffers face the reverse problem, with more liquidity tied up in materials at a time when financing costs remain elevated in many markets.

Labour markets refuse to move in step

Labour indicators strengthen the growth story in some economies and undermine it in others. US employers added staff at the fastest rate since January 2025 as confidence and order books improved. Eurozone employment increased for the first time this year, with manufacturing ending a 38-month sequence of job cuts. Japanese employment rose for a 35th consecutive month and at a faster-than-average pace.

India recorded one of the strongest hiring signals, with overall job creation matching its fastest rate since June 2025. Services drove the increase, while manufacturing employment fell for the first time in two-and-a-half years. Meanwhile, Australia continued to add jobs, albeit at the slowest pace in three months.

The UK remains the outlier. Staffing fell again in August, although the decline was the smallest since October 2025. Service-sector employment has now contracted for 23 consecutive months, the longest run since the survey began in 1996, with businesses frequently leaving vacancies unfilled when employees depart.

Wage and staffing assumptions therefore need as much localisation as inflation forecasts. Hiring pressure is returning in the US, eurozone, Japan and Indian services, while UK companies are still using headcount restraint to manage costs. Stronger recruitment can also raise payroll outflows before additional capacity feeds through to revenue, adding another timing issue to short-term cash forecasts.

Rate assumptions become more local

Viewed as a group, the August surveys make a synchronised global interest-rate path look increasingly unlikely. Stronger US growth is arriving alongside cooler selling-price inflation. Eurozone factories are recovering rapidly and companies have started hiring again, but price pressures are easing only gradually. UK activity is improving while costs accelerate. Japan combines strong manufacturing demand with near-record output-price inflation, while Australia is seeing renewed cost pressure without matching pricing power.

Such combinations point towards different trade-offs for central banks and different consequences for corporate balance sheets. The distinction reaches beyond headline borrowing costs. It can alter the relative appeal of holding surplus cash, the economics of fixed versus floating-rate debt and the value of locking in hedges before policy expectations move again.

Funding decisions made across several currencies may therefore need more regional flexibility. A company refinancing euro debt, setting sterling deposit assumptions or budgeting dollar borrowing costs cannot rely on the same inflation narrative simply because global activity is expanding.

Cash forecasts face a similar challenge. Faster services growth can lift receipts without generating the same inventory demands as a factory-led expansion. Stronger manufacturing in Japan and the eurozone may instead pull more cash into inputs and working capital, particularly while delivery times remain extended.

August’s PMI releases ultimately offer encouraging evidence that business activity is absorbing geopolitical disruption better than feared. Demand is growing across all six economies, confidence has improved in several markets and export orders are reviving in important parts of Europe and Asia.

Beneath that resilience sits a harder message. Growth is being produced by different sectors, companies have very different scope to pass on costs and inventory strategies are moving out of step. Finance teams now have to translate a broadly positive global growth signal into local assumptions for margins, liquidity and rates.

Revenue forecasts may be improving in more markets. What it costs to fund that growth, produce it and carry the working capital behind it is becoming much less uniform.