United States: Services PMI rises in June
The S&P Global U.S. Services Purchasing Managers’ Index (PMI) rose to 55.3 in June from 54.8 in May. As a result, the index moved further above the 50.0 no-change threshold, and signaled a faster improvement in services-sector business activity compared to the previous month.
June saw sharper increases in business activity and new orders, with companies responding by expanding their workforce for the first time in three months. Despite this, backlogs of work accumulated, indicating a strain on capacity. The growth in new orders was attributed to referrals and successful marketing. However, new business from abroad weakened for the fifth straight month, with lower demand from Europe in particular.
Inflationary pressures in the service sector eased slightly in June, though input and output price pressures remained above pre-pandemic averages. Finally, business sentiment improved, reaching a five-month high, buoyed by the recent uptick in new orders and the anticipation of interest rate reductions. Expectations that client commitment to new projects would improve after the November elections further contributed to business confidence.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said:
“US service sector companies reported an encouragingly solid end to the second quarter, with output rising at the fastest rate for over two years. […] With additional – albeit more muted – support coming from the manufacturing sector, the survey data point to GDP rising at an annualized 2.0% rate in the second quarter.”