Jul 24. () –
The US Composite Purchasing Managers’ Index (PMI) accelerated in July to highs not seen since April 2022, up two-tenths of a point, to 55 points, after detecting an upturn in services but a decline in manufacturing.
According to a provisional report by S&P Global, the fact that this figure exceeds 50 implies that US economic activity is expanding, as it has been doing for 18 consecutive months.
However, the gap between the drivers of growth widened as the services sector continued to grow and industrial production fell for the first time in six months.
In addition, there has been a slower pace of job creation and a second consecutive drop in business confidence due to poor future prospects, a dynamic motivated, in part, by growing political uncertainty ahead of the presidential elections in November.
Meanwhile, strong competition caused retail prices for goods and services to rise at one of the slowest rates in four years, although there was further upward pressure on production costs. Prices of inputs for goods and services rose at the sharpest rate in four months.
“Preliminary PMI data point to a ‘Goldilocks’ scenario at the start of the third quarter, with the economy growing at a robust pace while inflation moderates,” said Chris Williamson, chief economist at S&P Global Market Intelligence, who estimated the annualised GDP growth at 2.5% following the data. However, the analyst warned of the sluggishness of industry, uncertainty and inflation.
“From an output perspective, growth has become worryingly unbalanced, with the manufacturing sector sliding back into contraction while the services sector strengthens further. […] Both manufacturers and service providers are reporting increased uncertainty around the election, which is holding back investment and hiring,” he added.
“The July survey showed an increase in input costs, linked to higher costs for raw materials, transport and labour. These higher costs could feed through to sales prices, if they remain, or lead to a reduction in margins,” Williamson said, referring to inflation.
In disaggregated terms, the PMI for Commercial Activity in the Services Sector is at a 28-month high of 56 points, an increase of seven-tenths since the sixth month of 2024.
The Manufacturing PMI, meanwhile, reached 49.5 from 51.6 in June, its worst figure in seven months. The Manufacturing Production PMI, which measures whether business activity is higher, equal or lower than the previous month, also stood at 49.5 points, down two and six-tenths points.
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