USD Ends the Week at the Highs After Better Mfgt and Services PMI

The economic data from the US has been quite mixed recently, however today’s strong US manufacturing and services PMI readings for June contrasted with the PMI readings from Europe and Asia, which were pretty weak. As a result, the USD has been progressing upward and is closing the week at the highs.

US June S&P Global Flash PMI:

• Services PMI:

  • Actual: 55.1 points
  • Expected: 53.7 points
  • Prior: 54.8 points

• Manufacturing PMI:

  • Actual: 51.7 points
  • Expected: 51.0 points
  • Prior: 51.3 points

• Composite PMI:

  • Actual: 54.6 points
  • Expected: 54.5 points

Key PMI Insights:

• Selling Prices: Reported to be ‘at one of the lowest levels of the past four years’ and at a five-month low.
• Business Confidence: Improved outlook for the year ahead, particularly in the service sector, with renewed pressure on operating capacity due to rising demand.
• Service Sector Future Prospects: Reached a five-month high, indicating strong optimism within the sector.
• Service Sector Payrolls: Increased to the greatest extent in five months, helping to reverse some of the declines seen in the sector over the prior two months.

The latest services data exceeded even the most optimistic economist forecasts, signaling a resilient and robust economy. However, the favorable movement in pricing metrics may restrain any aggressive policy responses.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, analyzed the figures: “The preliminary PMI data for June indicate the fastest economic expansion in over two years, suggesting a strong finish to the second quarter with cooling inflation pressures. The PMI is indicative of an economy growing at an annualized rate of just under 2.5%. This broad-based upturn reflects robust domestic spending, led by a buoyant service sector, and supported by a recovering manufacturing sector experiencing its best growth phase in two years. The survey also reports encouraging job gains, driven by improved business confidence in future prospects. After a slight uptick in May, inflationary pressures on selling prices have eased, now at levels not seen in the past four years. Comparisons with historical data suggest this decline aligns the survey’s price gauge with the Fed’s 2% inflation target.”

Williamson’s analysis underscores a dual narrative of strong economic expansion and moderated inflation, potentially guiding a balanced policy approach. The solid performance across services and manufacturing sectors indicates a resilient recovery driven by increasing demand and improved business sentiment. This dual dynamic of economic strength and subdued inflationary pressures may shape a cautious stance from policymakers, prioritizing sustainable growth while maintaining price stability.