The United States composite Purchasing Managers’ Index (PMI) accelerated in July to highs not seen since April 2022, up to 55 points, two tenths more, after detecting a rebound in services, but a decline in manufacturing.
As S&P Global has provisionally revealed, 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 difference between the growth drivers was accentuated as the services sector supported its advance and industrial production fell for the first time in six months.
In addition, there has been a slower rate of job creation and the second consecutive drop in business confidence due to poor future prospects, a dynamic motivated, in part, by the growing political uncertainty ahead of the presidential elections in November.
Meanwhile, strong competition caused the retail prices of goods and services to increase at one of the most contained rates in the last four years, although new upward pressures were recorded on the side of production costs. Thus, the prices of inputs for goods and services rose at the steepest pace in the last four months.
“Preliminary PMI data points to a ‘Goldilocks’ scenario at the start of the third quarter, with the economy growing at a robust pace while inflation moderates,” summarized S&P Global Market Intelligence chief economist Chris Williamson. , which has quantified the annualized GDP growth at 2.5% based on the data obtained. However, the analyst has warned about the sluggishness of the industry, uncertainty and inflation.
“From a production perspective, growth has become worryingly unbalanced, with the manufacturing sector retreating into contraction while the service sector strengthens further. […] Both manufacturers and suppliers services report greater uncertainty around the elections, which is slowing investment and hiring,” he added.
“The July survey recorded an increase in input costs, linked to the rise in the costs of raw materials, transportation and labor. These higher costs could be passed on to sales prices, if they continue, or cause a reduction in margins,” explained Williamson on account of inflation.
In disaggregated terms, the PMI for Commercial Activity in the Services Sector is at a 28-month high, with 56 points, that is, an increase of seven tenths since the sixth month of 2024.
For its part, the Manufacturing PMI reached 49.5 from 51.6 in June, its worst mark in seven months. Afterwards, the Manufacturing Sector Production PMI, which measures whether company activity is higher, the same or lower than the previous month, also stood at 49.5 points, two points and six tenths less.
