24-Jun-2025 08:35

US business activity continued to grow in June, though the overall rate of expansion lost a little momentum to remain well below those seen late last year.

Falling exports of goods and services acted as a drag on growth, in part offset by stock building by US companies, often linked to concerns over tariffs.

Tariffs were also widely blamed on higher prices. These rose at an especially sharp and increased rate in manufacturing, but also continued to rise steeply in services.

Companies meanwhile struggled to meet rising workloads, with backlogs of work increasing at the fastest rate for over three years and encouraging firms to take on additional staff to the greatest degree for a year. However, confidence in the outlook deteriorated slightly.

The headline S&P Global US PMI Composite Output Index registered 52.8 in June, according to the 'flash' reading, down from 53.0 in May.

While the June rise in output was the third strongest so far this year, the pace of growth remains well below that recorded in late 2024. Output has nevertheless now grown continually for 29 months.

The ongoing expansion reflected a further rise in new orders, which have now risen continually for 14 months, though the rise in orders dipped slightly in June to remain well below the strong gains seen at the turn of the year.

Similar gains in inflows of new work were recorded in the manufacturing and service sectors and, in both cases, growth was driven by rising domestic demand.

This served to mask a fall in export orders in June. Service providers again recorded a steeper contraction than manufacturers, the latter down only slightly in June after a small rise in May.

Services exports have suffered the largest quarterly contraction since late 2022 in the three months to June.

The S&P Global Flash US Manufacturing PMI held steady at 52.0 in June, signaling a rate of expansion matching May's 15-month high.

Factory production rose for the first time in four months in June, and new orders growth slipped only marginally from May's three-month high. A notable boost to the PMI also came from employment, which rose in factories at the fastest rate for 12 months.

Although inventories and supplier delivery times also contributed positively to the PMI, their contributions moderated compared to May.

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