Following a slight bump in EU Composite PMI this morning, US Composite PMI dipped in June (preliminary) data driven by a slump in manufacturing.
While Services PMI slipped lower, Manufacturing plunged to its weakest since Nov 2017.
More worrisome is that Stagflation is here – New Orders tumbled to the lowest since September and inflation spiking with input costs at their highest since Sept 2013.
US continues to outperform according to the soft data surveys…
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“Price pressures remain elevated, however, widely blamed on a mix of rising fuel prices and tariff-related price hikes, as well as supplier’s gaining pricing power as demand outstrips supply for many inputs.
“Risks are tilted to the downside for coming months. Business expectations about the year ahead have dropped to a five month low, led by the weakest degree of optimism for nearly one and a half years in manufacturing. Exports are back in decline, showing the worst performance for over two years, causing factory order book growth to slump sharply lower compared to earlier in the year.
“For the first time this year, factory output is growing faster than order books, suggesting production may be adjusted down in coming months. Inflows of new business into the service sector have meanwhile cooled to the weakest since January. Finally, although employment is still rising strongly, even here there are signs of weakness, with the latest rise in payrolls being the lowest for a year.”
So surging prices are crushing orders and production is continuing to ignore it.. for now. That won’t end well.
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