S&P Global US PMI Results
Friday 01/07/2022 | 13:42 GMT-0
01/07/2022 | 13:42 GMT-0
- Preliminary 52.4
- Before 57.0
- First drop in new orders in more than two years
- Inflation pressures remained historically high, but increases in input costs and production costs eased to three-month lows
Chris Williamson, chief economist at S&P Global Market Intelligence, said:
“The PMI survey fell in June to a level indicative of the manufacturing sector acts as a drag on GDP, with this drag set to intensify as we move through summer. Forward-looking indicators such as business expectations, new order intake, labor backlogs and input purchases all deteriorated markedly, suggesting heightened risk of an industrial slowdown.
“Household demand growth is slowing amid the cost of living crisis, and business capital spending is also showing signs of slowing due to tighter financial conditions and a dimmer outlook. However, most notable was a sharp decline in input orders by manufacturers, suggesting an inventory correction.
“The good news is that lower demand for inputs has put some pressure on supply chains and calmed prices for a wide variety of goods, which should help ease broader inflationary pressures in countries. coming months.”
I want to put this into perspective. Demand for manufactured goods during the pandemic was extraordinary as it would drop, companies were overordering as they rushed to get inventory.
So now it’s recovery time. This will mean less demand for factories and negative numbers for the coming months. Should this be a surprise? No. Will this lead to a “recession” in the manufacturing sector? Absolute. But this “recession” is just the process of normalization and should not lead to mass factory layoffs or widespread pain, although I expect the usual commentators to act that way.
The ISM manufacturing survey is next and is expected to come in at 54.9 vs. 56.1 previously.
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