With ‘hard data’ having deteriorated recently (except in the labor market), ‘soft’ survey data has been surprisingly strong (especially in the Manufacturing side of the economy).

S&P Global’s US Manufacturing PMI dipped from multi-year highs at 55.1 to 53.9 final in June (below the 55.7 expected).

ISM Manufacturing also dipped from 54.0 to 53.3 (slightly below the 53.9 exp).

Both solidly above the ’50’ line suggesting growth…

Source: Bloomberg

Put simply: US manufacturing activity expanded for a sixth straight month in June as a war-driven surge in input costs eased.

Prices paid for raw materials, meanwhile, rose at a much slower pace in June.

The group’s price measure dropped 9.1 points to 73, the largest single-month drop since July 2022, as an interim agreement between the US and Iran sent oil prices tumbling.

New orders growth moderated, but remained solid, while ISM’s production gauge dropped to a six-month low.

Source: Bloomberg

“US manufacturers reported a further marked improvement in growth of output and order books in June, according to S&P Global’s PMI data,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

Despite the slight decline from the flash print, the final June data is extending the growth spurt that has been reported since the outbreak of the war in the Middle East.

“Employment was nevertheless cut sharply as firms often sought to offset the rising cost of energy and raw materials.

“Supply chain delays and upward price pressures continued to be widely reported, albeit moderating thanks to recent news of an improving situation in the Middle East.”

On the bright side, while still elevated, Input and Output prices are falling back, according to S&P Global survey respondents.

Some prices are up – can you guess which? Yep – AI supplier commodities…

However, Williamson concludes that despite the recent drop in energy prices and brighter outlook for shipping, business confidence has fallen sharply, “in part reflecting concerns that an end to war-related inventory building could start to act as a drag on sales.”