U.S. manufacturing growth remains strong
The PMI dipped to its lowest in four months as output and new orders both expanded at the slowest rates since November 2017.
Meanwhile, the effects of tariffs were widely cited as contributing to another sharp rise in input prices, while suppliers’ delivery times lengthened to the greatest extent since the series began.
Average charges also increased sharply, rising at the second-fastest rate since June 2011.
The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index (PMI) registered 55.4 in June, down from 56.4 in May.
The latest PMI reading was up from the ‘flash’ figure of 54.6 and ended the strongest quarterly performance since the third quarter of 2014.
Output growth remained strong in June, despite the rate of expansion easing to a seven-month low.
Similarly, the upturn in new orders was the softest since November 2017.
Although the expansion lost some momentum, it was solid nonetheless.
Panellists stated that growth was due to robust client demand and favourable market conditions.
However, new business from abroad contracted for the first time since July 2017 (albeit only slightly), amid reports of weaker foreign client demand following recent tariff announcements.
The rate of input cost inflation was the slowest for four months, but remained sharp nonetheless.
The rise in cost burdens was driven by greater global demand for inputs and the effects of recent tariffs.
Supplier shortages were a key factor behind longer delivery times.
Lead times for inputs lengthened to the greatest extent in the series history.
Factory gate prices also increased sharply, with the rate of inflation accelerating to the second-fastest since June 2011.
Panellists widely commented that higher input costs were partly passed onto clients.
Reflective mainly of difficulties in sourcing raw materials, buying activity and stocks of purchases grew at weaker rates in June.
Capacity pressures persisted, despite employment growth quickening since May, as backlogs increased solidly.
The rate of job creation was the fastest since February and outstanding business rose at the second-strongest rate since September 2015.
Business confidence was strong in June.
Optimism was commonly linked to expected sustained upturns in output and new orders.
That said, sentiment fell to the lowest level for five months. ■