25-Jul-2025 08:35

US business activity grew at a sharply increased rate in July, according to early 'flash' PMI data, marking a strong start to the third quarter.

Employment growth was also sustained. However, private sector expansion became increasingly unbalanced, as manufacturing business conditions deteriorated in contrast to a strengthening services economy, the latter fueled by rising domestic demand.

Business confidence in the outlook meanwhile deteriorated in both sectors as companies reported ongoing concerns over the impact of government policies, especially in relation to federal spending cuts and tariffs.

Alongside upward wage pressures, tariffs were also again widely linked to steeper cost inflation, which was increasingly passed through to customers. The resulting rate of inflation for prices charged for goods and services was among the largest seen over the past three years.

The headline S&P Global US PMI Composite Output Index rose sharply from 52.9 in June to 54.6 in July, according to the 'flash' reading. The latest reading signalled the fastest rate of growth recorded so far this year, with output having now increased continually for 30 months.

The S&P Global Flash US Manufacturing PMI fell to 49.5 in July, down from June's 37-month high, signaling a renewed deterioration of factory business conditions for the first time since December.

Production growth slowed as new orders placed at factories fell for the first time this year. Both employment and inventories of purchases also dropped for the first times since April.

Supplier delivery times meanwhile quickened for the first time since September last year, improving to the greatest extent for 17 months in a sign of less-busy supply chains (and hence also pulling the PMI lower).

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