The global economy expanded at its fastest pace in more than a year in August, lifted by stronger manufacturing output and steady services activity. But for wholesale distributors, the outlook is less straightforward as tariffs push up costs and business confidence falls.
The J.P. Morgan Global Composite PMI, compiled by S&P Global, rose to 52.9 in August from 52.5 in July, the highest level since June 2024. The reading marked the fourth consecutive month of accelerating growth, consistent with global GDP expanding at an annualized rate of 3.0%.
For distributors, the stronger output leads to continued order flow across industrial and consumer markets. Manufacturers reported their fastest production growth in more than a year, while services businesses kept expanding at a solid pace—both trends that support wholesale volumes.
But the report also flagged rising cost pressures. Input prices climbed to the fastest rate in three months, keeping output price inflation elevated. With U.S. tariffs feeding into higher charges, distributors face a difficult balancing act: passing along costs without eroding customer demand and protecting margins already under pressure.
New manufacturing orders rose in August for only the second time in five months, but analysts noted that many firms were front-loading purchases ahead of tariff deadlines. That could give distributors a short-term lift in sales before volumes slow as customers adjust to higher landed costs.
Confidence, meanwhile, slid to its lowest point since the pandemic era. S&P Global’s Future Output Index pointed to weaker expectations for investment and demand, suggesting distributors could see slower capital projects and more cautious purchasing decisions later this year.
Regional Signals
- United States: Tariff-driven price hikes are already evident, raising the risk of inflation sticking above target and limiting scope for easier monetary policy.
- Emerging Markets: Output growth accelerated to the fastest since late 2024, offering opportunities for globally oriented distributors.
- Europe and Japan: Growth remained subdued, signaling weaker demand for distributors tied to multinational manufacturers.
August’s PMI data shows distributors benefiting from resilient demand but contending with intensifying cost and margin pressures. With tariffs only partially reflected in the August numbers, the September PMI—due September 23—will provide a clearer test of how global distribution markets are absorbing the new trade environment.
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