US manufacturing activity continued to worsen
S&P Global has released the leading US manufacturing, services and composite PMI data for June.
Accordingly, the manufacturing industry PMI decreased by 2.1 points in June compared to the previous month and fell to 46.3.
Market expectations were for the index to take the value of 48.5 in this period. The index, which points to the contraction in the manufacturing sector by falling to its lowest level in six months, was 48.4 in May.
The service sector PMI in the USA, on the other hand, decreased by 0.8 points to 54.1 in June compared to the previous month.
The index, which fell to its lowest level in two months, was estimated to take the value of 54. The index, which shows that the expansion in the services sector continued despite the decline in this period, was recorded as 54.9 in May.
The composite PMI covering the manufacturing and services sectors also fell 1.3 points month on month to 53 in June.
Recording the lowest level in 3 months in the said period, the index was 54.3 in May.
“Growth continues to depend on service sector spending”
S&P Global Chief Economist Chris Williamson, whose views were included in the statement, stated that the overall growth of economic activity in the US remained solid in June.
Noting that the growth continues to depend on the service sector expenditures, Williamson said that manufacturing started to decline after three months of growth.
Williamson stated that the question of how durable the growth of the services sector can be in the face of the recession in the manufacturing sector and the lagged effect of interest rate hikes remains unanswered, adding that further interest rate hikes will have a more pressing effect on this industry, which is particularly sensitive to changes in borrowing costs.
Stating that the tightness of the labor market continues to be a cause for concern and increasing wage pressure continues to be the main driver of higher costs in the services sector, Williamson said, “However, as a sign that the US Federal Reserve has won its fight against inflation, general inflation for goods and services is expected to reach the end of 2020. It’s encouraging to see it drop to its lowest level since the end of the year.” made its assessment.
The fact that the PMI data is 50 and above will lead to expansion in the sector, under remaining indicates contraction.
