Prelim was 53.1Prior was 53.7Composite index 52.9 vs 52.8 prelim
Chris Williamson, Chief Business Economist at S&P Global
Market Intelligence
“The US service sector reported a welcome combination
of sustained growth and increased hiring in June, but also
reported elevated price pressures, all of which could add to
pressure on policymakers to remain cautious with regard to any
further loosening of monetary policy.
“Viewed alongside an improvement in manufacturing growth
reported in June, the services PMI indicates that the economy
grew at a reasonable annualized rate approaching 1.5% in the
second quarter, with momentum having improved since the
lull seen in April. Rising demand for services has meanwhile
encouraged firms to take on additional staff at a rate not seen
since January.
“We are seeing some worrying signs of weakness below the
headline numbers, however, notably in respect to exports and
falling activity among consumer-facing service providers, which
has curbed the overall pace of economic expansion. Concerns
over government policies have meanwhile created uncertainty
and dampened spending on services more broadly, while also
ensuring confidence in the outlook remains subdued compared
to the optimism seen at the start of the year. The continued
expansion of business activity in the coming months along the
lines seen in June is therefore by no means assured.
“Price pressures have remained elevated in June. Although
weak demand and intense competition were reported to have
helped moderate the overall rate of increase compared to May,
the overall rate of prices charged inflation for services remains
the second-highest for over two years, thanks to widely-
reported tariff-related cost increases, and will likely contribute
to higher consumer price inflation in the near-term.”
Market moves were minimal on this but Fed pricing for year-end is 52 bps in easing compared to 62 bps before non-farm payrolls.
This article was written by Adam Button at www.forexlive.com.