Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTRich DupreySun, July 26, 2026 at 5:52 PM GMT+2 4 min readQuick ReadS&P Global's composite PMI climbed to 53.6 in July, its highest reading in eight months, signaling roughly 2% annualized GDP growth in Q3.Rising input costs, supply chain disruptions, and the fastest selling-price increases in years give the Fed little reason to cut rates before 2027.Companies with strong balance sheets, free cash flow, and pricing power are best positioned to outperform in a higher-for-longer rate environment.Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now.The biggest question facing investors today isn't whether the U.S. economy is slowing -- it's whether it's slowing enough for the Federal Reserve to finally begin cutting interest rates. New data suggests the answer may be no.Kenishirotie / Shutterstock.comS&P Global's flash PMI report for July showed business activity accelerating more than expected, pointing to an economy that continues to expand despite elevated interest rates and lingering inflation pressures. That's good news for corporate earnings, but it also makes it harder for the Fed to justify easing monetary policy anytime soon.A Stronger Economy Than ExpectedS&P Global's composite PMI climbed to 53.6 in July from 51.9 in June, its highest reading in eight months. Both major parts of the economy contributed to the improvement, with the services PMI rising to 53.6 while manufacturing remained solid at 53.8.According to S&P Global Chief Business Economist Chris Williamson, the survey is consistent with annualized GDP growth of roughly 2% during the third quarter. Hiring improved for the first time in three months, while business confidence climbed to an eight-month high.Perhaps most encouraging was the balance between sectors. Earlier in the recovery, services largely carried the economy while manufacturers struggled. Now both are expanding, suggesting growth has become broader and more sustainable.24/7 Wall St.Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now. A booming economy is great for profits but a nightmare for anyone waiting on the Fed to blink. Here is how to pivot your portfolio for the 'higher for longer' era. © 24/7 Wall St.Why That's a Challenge for the FedNormally, stronger economic growth is something to celebrate. But for the Fed, it also raises the risk that inflation remains stubbornly above its 2% target.While June's inflation report showed encouraging progress, the PMI survey painted a more complicated picture. Input costs rose at the fastest pace in 14 months, supplier delivery delays reached their worst level in nearly four years amid Middle East disruptions, and businesses reported the strongest selling-price increases in years.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info