United States: Manufacturing PMI moves into contractionary territory in July
The S&P Global U.S. Manufacturing Purchasing Managers’ Index (PMI) fell to 49.6 in July from 51.6 in June. As a result, the index moved below the 50.0 no-change threshold, and signaled a deterioration in manufacturing-sector operating conditions compared to the previous month.
The decline in the PMI was primarily driven by a reduction in new orders, which was the first in three months and the fastest in 2024 so far. Additionally, new export orders fell, particularly affected by demand weakness in Canada. Despite the fall in new orders, manufacturing production continued to rise, albeit at a marginal pace, as firms worked through outstanding business and increased stocks of finished goods in anticipation of future demand improvements.
Input cost inflation remained marked but eased to a four-month low, while output price inflation moderated to the lowest rate in a year. Finally, business sentiment improved slightly at the start of the third quarter, driven by hopes that the current soft patch in demand would be temporary and that new business would pick up following the presidential election.