US business activity expanded in early July at the slowest pace in five months as services growth moderated.
(Bloomberg) — US business activity expanded in early July at the slowest pace in five months as services growth moderated.
The S&P Global flash US composite purchasing managers index fell 1.2 points to 52 in July, the group reported Monday. Readings above 50 indicate growth. A gauge of future activity also declined, slipping to its weakest level this year as service-provider optimism waned.
“The darkening picture adds downside risks to output growth in the coming months which, alongside the slowing in the pace of expansion in July, will keep alive fear that the US economy may yet succumb to another downturn before the year is out,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
“The stickiness of price pressures meanwhile remains a major concern,” he said.
The composite gauge of prices charged ticked up in early July, indicating the stubbornness of inflationary pressures. Manufacturers’ input prices increased for the first time in three months.
Service providers reported higher operating expenses, with wages being the primary driver as companies continue to have difficulty retaining workers. The index of employment at service providers slid to a six-month low.
The group’s overall services gauge dropped 2 points to a five-month low of 52.4.
The manufacturing index continued to show contraction, though at a slower rate. Factories pared inventories of materials and finished goods as domestic and global demand remained soft, the report showed.
Manufacturers expect a brighter future, though, bolstered by hopes of a greater ability to hire and cooling input costs.
The picture proved grimmer in Europe, where the latest data showed the euro-area private-sector economy contracted more than anticipated in July. British companies, meanwhile, reported their slowest growth in six months, while activity in Australia shrank. Business activity in Japan expanded.
–With assistance from Molly Smith.
(Adds graphic and figures from other countries.)
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