US PMI Shows More Recovery Signs

The flash US Composite PMI Output Index posted 50.0 in July, up from 47.9 signaling a stabilization in private sector output, according to data by IHS Markit.

Data shows that private sector companies in the United States are showing stable business activity and recovering from the impacts of the COVID-19 crisis.

Meanwhile, contraction in service sector output is slowing further, while and the manufacturing sector indicated a modest upturn in production.

The US Services Business Activity Index recorded 49.6, compared with 47.9 in June, the manufacturing PMI registered 51.3, while the manufacturing output index reached 52.1, up from 47.5 in June.

While the stabilization of business activity in July is welcome news, the lack of growth is a disappointment. Moreover, a renewed acceleration in the rate of loss of new business raises concerns that demand is faltering.

Many companies, notably in consumer-facing areas of the service sector, linked falling sales to reimposed lockdowns.

Firms’ costs have meanwhile spiraled higher, surging at the steepest rate for seven years in the service sector, in part due to the additional burdens of safeguarding against the coronavirus.

Chris Williamson, Chief Business Economist at IHS Markit