| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 54.2 | 51.5 to 55.5 | 53.6 | 52.2 |
| Manufacturing Index | 54.3 | 51.5 to 55.5 | 53.8 | 55.7 |
| Services Index | 51.2 | 51.0 to 51.5 | 53.6 | 51.3 |
Highlights
The S&P Global US Composite Purchasing Managers’ Index preliminary reading came in at 53.6 in July compared to 51.9 in June, and 51.5 in May. This is the highest level in eight months, with business confidence surging and companies adding employees for the first time in three months.
However, the improvement is limited to the services sector, with a significant dedeleration in manufacturing growth.
Supplier delays worsened to the greatest extent in nearly four years amid the ongoing conflict in the Middle East, the report said, while price pressures also intensified, with input cost inflation spiking to a 14-month high and selling price inflation soared close to a four-year peak.
The US Services PMI Business Activity Index recorded 53.6 in July, compared to 51.2 in June, and 50.7 in May, above expectations of 51.2 in the Econoday survey of forecasters. The end of the FIFA World Cup and resumption of the Iran conflict might make this a short-lived rise in activity.
The Manufacturing PMI’s preliminary reading came in at 53.8, compared to 53.9 in June, 55.1 in May and beating expectations for 54.3 in the Econoday survey of forecasters.
Manufacturing output continued to rise, but factories reported the weakest gains in output and order books since March, the report said.
Looking ahead, the positive outlook among services firms might end up derailed by resurging energy prices that once again squeeze customer spending. Meanwhile, manufacturing optimism is down to its lowest since last October, “reflecting weaker demand growth, global trade worries, geopolitical uncertainty, tariffs and high costs.”
Regarding prices, selling price inflation accelerated with higher costs passed on to customers, with the overall rise in charges the steepest since August 2022. Factory gate price inflation remained sharp, but at a lower level, while services charge inflation rose to the highest in just under four years.
There were modest increases in hiring in both manufacturing and services. “High costs and an uncertain trading environment restrained hiring and often led firms not to replace leavers, though some companies continued to report difficulties finding staff,” S&P said.
Market Consensus Before Announcement
Manufacturing seen up at 54.3 in the July flash from 53.9 in the June final. Services expected unchanged at 51.2.
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.