The S&P Global US Composite Purchasing Managers' Index came in at 52.8 in June, down from 53.0 in May signaling a slowdown in services sector activity while manufacturing output rose for the first time since February.

US business activity continued to grow, although the overall rate of expansion lost a little momentum to remain well below those seen late last year. Falling exports of goods and services acted as a drag on growth, in part offset by stock building by US companies, often linked to concerns over tariffs, the report said.

The US Services PMI Business Activity Index recorded 53.1 in June, down from 53.7 in May, and just above expectations of 53.0 in the Econoday survey of forecasters.

The US Manufacturing PMI was unchanged at 52.0 in June, signaling a rate of expansion matching May's 15-month high. The Manufacturing Output Index jumped to 51.5 in June from 49.4 in May, a four-month high.

Price pressures rose sharply across both manufacturing and service sectors during June, the former reporting an especially steep increase, and again commonly linked to tariffs.

Manufacturers' input prices and selling prices both rose at the fastest pace since July 2022, as higher costs were passed on to customers. Prices also rose sharply in the service sector, due to not just tariffs but also higher borrowing, wage and fuel costs.

Trade worries and anxiety around government policies have moderated since April, but the report noted that companies generally remained less upbeat than prior to the inauguration of President Trump.

This was especially notable in the service sector, where confidence fell in June amid heightened uncertainty over government policy such as spending cuts, it said. In contrast, manufacturers grew slightly more upbeat, in part reflecting hopes of greater benefits from trade protectionism than service sector counterparts.

Analysts believe growth slowed but remained positive in June. The consensus looks for the PMI manufacturing at 51.0 for June versus 52.0 in the May final. Forecasters expect the services index at 53.0 in June versus 53.7 in the May final.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.