Highlights of the Markit US PMIs
- Prior was 64.6
- In services “some firms
noted customer hesitancy amid significant hikes in
selling prices” - Firms noted
the lowest degree of optimism since February - New export orders eased
- Manufacturing 63.1 vs 62.1 expected
- Composite PMI 59.7 vs 63.7 prior
- Full report
This is a five-month low for the services index and given that we’re at prime time in the reopening, that’s not a great sign. That said, the survey downplays it noting that growth is continuing at a slower pace.
“The provisional PMI data for July point to the pace of
economic growth slowing for a second successive
month, though importantly this cooling has followed an
unprecedented growth spurt in May,” said IHS Markit chief economists Chris Williamson. “Some moderation
of service sector growth in particular was always on
the cards after the initial reopening of the economy,
and importantly we’re now seeing nicely-balanced
strong growth across both manufacturing and
services.”
The ISM manufacturing report is due out Aug 2 and the services report Aug 4.
More from Williamson:
“While the second quarter may therefore represent a
peaking in the pace of economic growth according to
the PMI, the third quarter is still looking encouragingly
strong.“Short-term capacity issues remain a concern,
constraining output in many manufacturing and
service sector companies while simultaneously
pushing prices higher as demand exceeds supply.
However, we’re already seeing signs of inflationary
pressures peaking, with both input cost and selling
price gauges falling for a second month in July, albeit
remaining elevated.“Inflationary pressures and supply constraints – both
in terms of labour and materials shortages –
nevertheless remain major sources of uncertainty
among businesses, as does the delta variant, all of
which has pushed business optimism about the year
ahead to the lowest seen so far this year. The concern
is this drop in confidence could feed through to
reduced spending, investment and hiring, adding to
the possibility that growth could slow further in coming
months.”
Overall, this is a disappointing report and some of the air is coming out of commodity currencies.