- Fifth consecutive improvement in services
- Prior was 54.9
- Manufacturing 46.3 vs 48.5 expected
- Composite 53.0 vs 54.3 prior
- Services new orders grew at a strong rate
- Full report
The manufacturing and services PMIs are headed in opposite directions.
The services upturn was led by
strong customer confidence and new client acquisitions, according to S&P Global.
In terms of services inflation, this isn’t what the Fed wants to hear:
“Service sector firms registered a quicker rise in input prices
at the end of the second quarter. The rate of cost inflation
was the steepest for five months, as companies stated that
greater wage bills in particular placed further pressure on
business expenses. Conversely, companies sought to
remain competitive and drive sales which led to a slower
uptick in output charges during June”
Commenting on the US flash PMI data, Chris
Williamson, Chief Business Economist at S&P Global
Market Intelligence said:
“The overall rate of expansion of business activity in the
US remained robust in June, consistent with GDP rising
at a rate of 1.7% to put second quarter growth in the
region of 2%.
“Growth remains dependent on service sector spending,
however, with manufacturing slipping back into decline
after three months of growth. While improving supply
conditions had helped boost manufacturing production in
prior months, an increasingly severe downturn in new
orders mean factories are running out of work.
“The situation is brighter in the service sector, where
demand is proving resilient and the recent pause in rate
hikes appears to have helped boost business optimism
for the year ahead.
“The question remains as to how resilient service sector
growth can be in the face of the manufacturing decline
and the lagged effect of prior rate hikes. Any further rate
hikes will of course have a further dampening effect on
this sector which is especially susceptible to changes in
borrowing costs.
“The tightness of the labor market remains a concern,
and upward wage pressure remains a key driver of higher
costs in the service sector. However, it is encouraging to
see the overall rate of selling price inflation for goods and
services drop to the lowest since late 2020 in a sign that
the Fed is winning its fight against inflation .”