S&P Global Services Survey Alert! US economy slows sharply amid renewed downtrend in demand as PMI falls to 51.6 in June vs. 53.4 in May.
According to the survey, inflation is forcing consumers to cut back on goods (not services) and interest rates are causing concern of a recession
Source (data collected June 13-22)
Key findings:
(any number over 50 signifies expansion and readings below that mark point to economic contraction)
- Flash US PMI Composite Output Index(1) at 51.2 (May: 53.6). 5-month low.
- Flash US Services Business Activity Index(2) at 51.6 (May: 53.4). 5-month low.
- Flash US Manufacturing Output Index(4) at 49.6 (May: 55.2). 24-month low.
- Flash US Manufacturing PMI (3) at 52.4 (May: 57.0). 23-month low.
Other Notes:
Goods producers registered the lowest degree of confidence in the outlook for output over the coming year for 20 months in June. Despite hopes that demand will improve and investment increase, concerns regarding inflation, interest rates, supply chain disruption and the health of the wider economy weighed on expectations.
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Weaker growth in business activity was driven by a solid fall in new orders. Client demand dropped for the first time since July 2020, and at the steepest pace for over two years. Total new sales were also weighed down by the quickest decrease in new export orders since December 2020.
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Average cost burdens increased at a marked pace in June, as supplier, material, fuel, transportation, and wage bills soared again. The rate of input price inflation was the softest for five months and eased notably from May, but was much quicker than the series average. Similarly, the pace of output charge inflation softened and was the slowest since March 2021. Although firms continued to pass-through hikes in costs to clients, some mentioned concessions were made to customers.
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business confidence slumped to one of the greatest extents seen since comparable data were available in 2012, down to the lowest since September 2020.
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As a result, the rate of job creation eased to the softest in four months. Meanwhile, inflationary pressures, hikes in interest rates and weaker client demand all dampened service provider expectations for output over the coming year. Sentiment remained positive, but was at its lowest level since September 2020.
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