United States: Composite PMI sinks to over two-year low in July
The S&P Global Flash Composite Purchasing Managers’ Index (PMI) dived to an over two-year low of 47.5 in July, from 52.3 in June. As a result, the index plunged below the 50.0 no-change threshold, pointing to the sharpest month-on-month deterioration in business conditions since the height of the Covid-19 lockdowns in 2020.
The deterioration was broad-based. Although overall new orders edged up in July, the outturn marked the second-worst reading two years. While service companies saw just marginal growth in new business, manufacturers recorded a second successive fall in new orders in July. Moreover, hiring slowed to the weakest pace since February in July, amid cost-cutting initiatives, while backlogs of work fell at the steepest rate since May 2020. Meanwhile, business confidence among U.S. firms slipped to a near two-year low in July, due to rising inflationary and
recession concerns. Lastly, despite easing to a six-month low, input price inflation remained elevated, leading to a substantial hike in selling prices during July.
The S&P Global Flash US Services Business Activity Index fell to 47.0 in July, from 52.7 in June. Meanwhile, the S&P Global Flash US Manufacturing PMI inched down to 52.3 in July, from 52.7 in June.
Commenting on result, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:
“The preliminary PMI data for July point to a worrying deterioration in the economy. Excluding pandemic lockdown months, output is falling at a rate not seen since 2009 amid the global financial crisis, with the survey data indicative of GDP falling at an annualized rate of approximately 1.0%. Manufacturing has stalled and the service sector’s rebound from the pandemic has gone into reverse, as the tailwind of pent-up demand has been overcome by the rising cost of living, higher interest rates and growing gloom about the economic outlook.”