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US PMI rises to an eight-month high, but cost pressures grow
S&P Global data pointed to an annualized third-quarter growth pace of about 2.0%, while input prices and supply-chain delays intensified again.
US business activity accelerated at the start of the third quarter, with S&P Global’s Flash Composite PMI Output Index rising from 51.9 to 53.6 in July, the highest reading in eight months, Action Forex reported. The services sector drove the gain, where its Business Activity Index climbed from 51.2 to 53.6, also an eight-month high.
Manufacturing, however, showed signs of losing momentum. The Manufacturing PMI edged down from 53.9 to 53.8, while the Manufacturing Output Index fell sharply from 56.2 to 53.6, marking a four-month low as earlier inventory-driven strength faded, according to Action Forex.
The survey aligned with an annualized US economic expansion of around 2.0% in the third quarter, improving from the roughly 1.2% pace indicated for the second quarter. It also showed businesses returning to hiring for the first time in three months, but Action Forex noted that some of July’s strength may be temporary due to events such as the FIFA World Cup and the USA 250 anniversary celebrations.
Beneath the improvement, renewed cost pressure emerged. Manufacturers reported intensifying supply chain delays and a renewed increase in input prices as inventory accumulation waned, and S&P Global Market Intelligence’s Chris Williamson warned that the escalation in the Middle East could aggravate supply disruptions and inflation pressures, raising downside risks for growth, Action Forex said.