The S&P Global “flash” U.S. service sector activity index declined to 54.1 in June, reaching a two-month low compared to the previous month’s reading of 54.9. Economists surveyed by the Wall Street Journal had anticipated a reading of 53.3, indicating a slightly stronger performance.
Similarly, the S&P Global “flash” U.S. manufacturing sector index decreased to a six-month low of 46.3 in June, down from May’s reading of 48.4. Economists had predicted a reading of 49, reflecting a more positive outlook.
It is important to note that readings above 50 indicate expansion, while readings below 50 signify contraction.
In terms of key details, the services sector experienced a strong increase in new orders in June, with expansion rates closely resembling the 13-month high recorded in May. Conversely, manufacturers observed the sharpest contraction in new orders since December, attributing it to subdued consumer confidence and a lack of demand from foreign clients.
Inflationary pressures appeared to be moderating, as the overall rate of selling prices for goods and services reached its lowest level since late 2020.
Taking a broader perspective, the S&P Purchasing Managers’ Index (PMI) provides insights into the future health of the economy, a crucial consideration given the uncertainty acknowledged by Federal Reserve officials regarding the U.S. economic outlook.
An S&P composite output index indicated the fifth consecutive month of growth in private sector activity.
Chief Business Economist at S&P Global, Chris Williamson, commented on the findings, stating, “The overall rate of expansion of business activity in the U.S. remained robust in June, consistent with GDP rising at a rate of 1.7% to put second-quarter growth in the region of 2%.”
