U.S. Business Activity Accelerates Amid Middle East Conflict

U.S. business activity accelerated in July, primarily driven by a surge in the services sector. S&P Global reported that the flash services Purchasing Managers' Index reached 53.6, marking an eight-month high. This growth was supported by increased spending during the FIFA World Cup and Independence Day festivities.

In contrast, manufacturing growth slowed to its lowest level since March as precautionary stock building declined. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the improvement in services may be short-lived due to the temporary nature of the July events and a weakening in manufacturing.

Economic momentum faces significant headwinds from an intensifying war involving the United States, Israel, and Iran. The conflict has seen a resumption of air strikes and the closure of the Strait of Hormuz, pushing global oil prices toward $100 a barrel and U.S. gasoline prices above $4 a gallon. These developments have triggered renewed supply chain delays and price pressures that may stifle future economic growth.