Preliminary data released by S&P Global showed that the growth rate of business activity in the US private sector slowed in June, and was the second weakest since July 2020.
The US PMI Composite Output Index fell to 51.2 points in June from 53.6 points in May. However, the index remained above 50 points, which indicates an expansion of activity in the sector. The services PMI fell to 51.6 points from 53.4 points in May, while economists had expected an increase to 53.5 points. Meanwhile, the manufacturing PMI fell to 52.4 points from 57.0 points in May. Consensus estimates suggested a drop to 56.0 points.
The data also showed that factory production slipping into decline as the respectable seasonally adjusted index fell to a degree only exceeded twice in the 15-year history of the survey, in 2020 and in 2008. The new orders index also deteriorated significantly in June, recording the first contraction since July 2020, while the new export orders index declined at the fastest pace since June 2020 amid high inflation and supply chain disruptions.
As for the inflationary situation, the growth rate of purchase prices slowed to a 5-month low, but was sharper than ever before April 2021. Along with the increase in prices for food, fuel, transport and materials, companies often mentioned that wages also increased. Meanwhile, the growth rate of selling prices was the weakest since March 2021.
S&P Global also reported that private sector employment growth slowed to its lowest level since February, and the volume of backlogs of work declined for the first time in two years. Meanwhile, business confidence slumped to one of the greatest extents seen since comparable data were available in 2012, down to the lowest since September 2020.