The preliminary reading of the S&P Global PMI survey points to slowing business activities in the US economy.
The Business activity in the US manufacturing sector grew at the slowest pace since July 2020 as the flash reading of S&P Global Manufacturing PMI fell to 52.3 in Jul-22 (Jun-22: 52.7), mainly because of reduced orders.
Meanwhile, the preliminary PMI for the services sector declined to 47.0 (Jun-22: 52.7), the lowest reading since May 2020 as business activity and expectations among service providers weakened during the month.
As the composite PMI and the services PMI falling below 50, we expect the US economic growth would ease further going into 2HCY22, with challenges from supply disruption, high inflation and deterioration in confidence.
“Nevertheless, we opine the Fed will continue raising borrowing costs in the economy to ease demand and contain inflation. Production activity, on the other hand, will likely grow further albeit at moderate level in view of the slowing new orders.
“We believe this resilience will result in ‘soft landing’ for the US economy amid tightness in the labour market and continued job growth,” says MIDF.
UK retail sales slip in June as consumers struggle with inflation
Consumer spending in the UK weakened further in Jun-22 as retail sales fell by -5.8%yoy (May-22: -4.7%yoy), the third straight month of contraction. From month-on-month perspective, retail sales declined by -0.1%mom, not as large as -0.3%mom predicted market.
However, the continued decline reflects the impact of high inflation on consumers spending particularly on motor fuel, and purchases of other items such as clothing and household goods.
“With inflation at multi-year high level and the Bank of England to continue with its policy tightening, we foresee the weak spending to continue as the level of confidence among UK consumers remained at record low.
“However, the recent correction in commodity prices, particularly food crops, would ease some of the consumers’ concerns, particularly the high food prices,” says MIDF.