US economy shows signs of ‘goldilocks’ to start Q3 – PMI

US economic growth accelerated in July, according to the latest S&P Global Flash US Composite PMI report. The index, which measures business activity, reached its highest level in 27 months, signaling a robust start to the third quarter.

“The flash PMI data signal a ‘Goldilocks’ scenario at the start of the third quarter, with the economy growing at a robust pace while inflation moderates.” Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated.

Services Lead, Manufacturing Lags

While the overall economy expanded, the performance was uneven across sectors. The service industry thrived, with output growing at its fastest pace in over two years. In contrast, manufacturing activity contracted for the first time in six months.

Price Pressures Ease but Remain

Encouragingly, prices rose at a slower pace, suggesting inflation might be cooling down. However, the cost of inputs increased, potentially fueling future price hikes.

Employment and Outlook

Job growth continued, albeit at a slower pace than in June. Business confidence dipped due to election uncertainty and persistent high living costs. Manufacturers, while facing challenges, expressed optimism about future growth.

While the overall economic picture is positive, challenges remain, including manufacturing weakness and inflationary pressures. The upcoming months will reveal if this “Goldilocks” scenario, with growth and moderating inflation, can be sustained.

Attribution: S&P Global Flash US Composite PMI