Research Summary
The Flash Purchasing Managers’ Index (PMI) data for the United States in June indicates a mixed economic landscape. While the overall business activity continues to expand, the pace has slowed due to a renewed contraction in the manufacturing sector. The services sector remains a bright spot, continuing to record robust growth. However, the rate of expansion has cooled from the 13-month high of May. The manufacturing sector recorded a solid decline in production, with the Factory Production Index falling at the steepest rate since January. In contrast, robust growth continued to be recorded in the service sector.
Actionable Insights
- Monitor Manufacturing Sector: The manufacturing sector has shown a significant contraction. This decline in the health of the sector was the most severe in 2023 to date and stemmed from a marked reduction in new orders. This trend needs to be monitored closely.
- Assess Services Sector: Despite the overall slowdown, the services sector continues to show robust growth. However, challenges persist, including a quicker rise in input prices at the end of the second quarter, driven primarily by increased wage bills.
- Stay Informed on Global Trends: Weakness was most noteworthy in global manufacturing, where every reading showed contraction. Services remained resilient, but showed signs of slowing. It’s crucial to stay informed about these global trends.
- Prepare for Potential Recession: With a 14th month in a row of negative LEIs pointing toward a recessionary environment, it’s important to prepare for potential recession risks.
