| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 45.6 | 45.1 to 46.0 | 47.6 | 43.5 |
| Manufacturing Index | 49.8 | 49.6 to 50.5 | 50.7 | 48.9 |
| Services Index | 45.8 | 44.0 to 46.8 | 47.4 | 42.9 |
Highlights
The composite index rose to a two-month high in June to 47.6 from 44.9 in May, but continues to remain in contractionary territory below 50. The result is better than economists had been expecting, according to the median of 45.6 in an Econoday survey of economists' forecasts.
Improvement was attributed to stabilizing employment and easing cost and price pressures. Despite that, however, new orders fell for the seventh consecutive month, with export orders continuing to fall sharply, indicating slack demand. Cost pressures abated for the first time since February, but inflation is still well above that level which is the month before the conflict in the Middle East started.
The manufacturing component of the PMI moved above 50 in June, indicating sectoral expansion. The June result of 50.7 was above the May level of 49.7. The Econoday survey median was 49.8.
While services also improved in June, the sector remains in contraction. The 47.4 June result is the three-month high, and an improvement over 44.3 in May. Economists were expecting a 45.8 result.
The conflict in the Middle East continues to be the major influence on the PMIs and despite some positive signs in the results, the economy is still facing many hurdles in the coming months.
Market Consensus Before Announcement
Slightly better but still showing substantial contraction with services lagging badly. The composite is seen at 45.6 for the June flash versus 44.9 in the May final.
Definition
The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around ten days ahead of the final report and are typically based upon around 85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity 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.