| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 51.2 | 50.6 to 52.1 | 52.2 | 51.7 |
| Manufacturing Index | 54.7 | 54.5 to 55.3 | 55.7 | 55.3 |
| Services Index | 51.0 | 50.4 to 51.3 | 51.3 | 50.9 |
Highlights
The S&P Global US Composite Purchasing Managers' Index preliminary reading came in at 52.2 in June compared to 51.5 in May, and 51.7 in April. This marks the third straightly monthly improvement, but the growth rate remains weaker compared to the beginning of 20256.
Concerns over the economic outlook and rising costs led employers to trim their payrolls, while keeping selling prices elevated.
S&P also cautions that the survey results show a lack of broad-based economic activity, as demand for services remains sluggish while stock building fueled by supply chain concerns continues to support the manufacturing sector. Meanwhile, both goods and services exports continue to decline.
While the latest reading signals an improvement in the growth trajectory from March's two-and-a-half year low, the expansion remains subdued compared to the start of the year, prior to the outbreak of the war in the Middle East, the report said.
The US Services PMI Business Activity Index recorded 51.3 in June, compared to 50.7 in May, and 51.0 in April, above expectations of 51.0 in the Econoday survey of forecasters. Service providers often cited elevated prices, higher interest rates, and low confidence among both business and consumer customers, it said.
The Manufacturing PMI's preliminary reading came in at 55.7, compared to 55.1 in May, 54.5 in April and beating expectations for 54.7 in the Econoday survey of forecasters.
Manufacturing output rose at the fastest rate since July 2021, powered by the largest jump in new orders for just over four years. However, the manufacturing expansion was again partly attributable to demand being temporarily supported by the front-running of potential supply issues and price hikes associated with the war, the report said.
Regarding prices, goods price inflation cooled but remains elevated, while service sector selling price inflation surged to an 11-month high. This as manufacturing input cost inflation was the second highest for almost four years, and services input cost inflation meanwhile rose to a six-month high.
On the jobs front, overall employment is down for the second consecutive month and for the third time in four months as companies prioritize cost reduction in the uncertain economic environment.
While only a modest drop in services jobs was reported, manufacturing headcounts were cut at the fastest rate since the COVID-19 lockdowns of early 2020, the report said.
Looking ahead, expectations improved in both sectors, tied to hopes for less disruptions and price pressures post-Iran conflict.
In both cases sentiment nonetheless remained well below long-run averages to point to historically subdued business confidence overall, often blamed on uncertainty over the economic outlook amid concerns relating to the ongoing impact of the war in the Middle East and government policies such as tariffs, S&P said.
Market Consensus Before Announcement
Another month of modest expansion is the call. Composite expected at 51.2 for the June flash versus 51.5 in the May final. Manufacturing expected at 54.7 versus 55.1 and services at 51.0 versus 50.7, respectively.
Definition
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.
Description
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.