U.S. Economics – Business Sentiment

Intro

S&P Global Flash PMIs for the United States were in line with our expectations for the direction of economic activity, signaling a moderation in growth and higher inflation. The Composite PMI declined to 52.8 from 53.0, Manufacturing was unchanged at 52.0, and Services declined to 53.1 from 53.7. Manufacturing and Services sectors reported higher prices, with the former outpacing the ladder, largely due to tariffs. Overall, this data points to slower growth and increases the probability of seeing another y/y acceleration in CPI for June.

Business Sentiment

The Signals:

• • Composite PMI (Chart 1)
    • The U.S. Composite PMI for June declined to 52.8 from 53.0 but remains in expansion and above its historical average.
  • Manufacturing PMI (Chart 2)
    • The U.S. Manufacturing PMI was unchanged at 52.0 in June but remains in expansion above its historical 70^th percentile mark.
      • An increase in factory production and employment was reported for June.
      • On the labor front, we will be watching for corroboration of this development when nonfarm payrolls for June are released on July 3^rd.
      • Input and selling prices accelerated at their fastest rates since July 2022, according to the report.
  • Services PMI (Chart 3)
    • The U.S. Services PMI for June declined to 53.1 from 53.7 but remains in expansion and above its historical average.
      • Prices were reported to have increased in the Services sector, largely attributed to tariffs in addition to higher financing costs, wages, and fuel costs.

The Takeaway:

• As the first look into the trajectory of economic data for June, the S&P Global Flash PMIs provided further evidence of slower growth and higher inflation.

Visuals:

(Chart 1)

Source: Macrobond

(Chart 2)

Source: Macrobond

(Chart 3)

Source: Macrobond

Market Trends:

Source: Macrobond

The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance.  The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.