US business activity picks up on manufacturing strength
Both manufacturers and service providers were more optimistic about the future
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US BUSINESS activity expanded at the fastest pace in five months, bolstered by a surge in demand for manufactured goods.
The S&P Global flash composite purchasing managers index rose to 52.2 in June, according to data released on Tuesday (Jun 23). Figures above 50 indicate expansion.
The group’s manufacturing gauge rose to 55.7, the highest since May 2022, as factories ramped up production to meet the strongest new orders growth in more than four years.
Activity at service providers also improved, boosted in part by the World Cup. Even so, high prices and low consumer confidence continued to weigh on demand.
“Brighter news out of the Middle East has helped restore some confidence among US businesses in June,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
The service sector, however, “continues to grow at an especially subdued pace,” he said. ”While there is better news from the manufacturing sector, we remain concerned as factory growth continues to be temporarily buoyed by inventory building amid supply fears.”
Overall input prices continued to rise but at a slightly slower pace, and supplier delivery times lengthened.
With supply chain delays growing more widespread — and additional price hikes likely coming down the pipeline — manufacturers built their stockpiles of materials.
Input buying by factories surged in June, with inventories of inputs swelling to the second fastest rate on record.
With materials prices still high, firms sought other ways to cut costs. Headcount shrank at both factories and service providers in June. The group’s manufacturing employment index slumped to the lowest level since May 2020. Service providers, meantime, raised prices at a faster rate.
Both manufacturers and service providers were more optimistic about the future, likely reflecting hopes of an easing in war-driven cost pressures in the months ahead.
Survey data were collected on June 11-22. During that period, the US and Iran signed a memorandum of understanding, helping to pave the way toward a permanent peace deal. REUTERS
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