US business activity loses steam in June

S&P Global said its US PMI Composite Production Index, which tracks the manufacturing and service sectors, fell to 53 this month, the lowest reading since March.

However, it was the fifth month in a row that it has been above 50, indicating growth in the private sector.

The survey data, collected June 12-22, add to evidence that the US economy has continued to expand in the April-June period, even as it relies increasingly on the vast service sector for overall growth of the Gross Domestic Product.

“The overall pace of expansion of business activity in the US remained robust in June, in line with GDP rising at a pace of 1.7% to put second-quarter growth at around 2%,” said Chris Williamson, from S&P Global Market Intelligence.

The Atlanta Fed’s GDP Now model currently pegs second-quarter growth at an annualized rate of 1.9%. The economy grew at a rate of 1.3% in the first quarter, a figure that some economists believe will be revised up next week, when the Commerce Department publishes its final growth estimate for the first three months of the year.

The S&P Global survey measure of new orders received by private companies dipped to 53.5 in June from 54.3 in April, with the service sector holding that key metric above 50. Manufacturing new orders fell to its lowest level. lowest in six months.

Input prices showed inflation passing through from manufacturing to services, which could keep the Fed in a tight stance. In general, the prices of inputs rose this month and the indicator for the services sector reached a maximum since January, despite the fact that the cost of inputs in factories fell to their lowest level in three years.

The service sector PMI index fell to 54.1 from 54.9 in May. Economists polled by Reuters had expected a drop to 54.

The PMI manufacturing index fell to 46.3 from 48.4 in May and was below economists’ median forecast of 48.5. The index has recorded growth only once since the start of the crisis. This index has only recorded growth once since last October.