The Purchasing Managers’ Index (PMI) S&P Global Flash Composite fell to a two-year low of 47.5 in July from 52.3 in June. As a result, the index fell below the no-change threshold of 50.0, marking the sharpest monthly deterioration in business conditions since the height of the Covid-19 lockdown in 2020.
The deterioration was widespread. Although overall new orders increased in July, the result was the second worst in two years. While service companies showed only a modest increase in new orders, manufacturers recorded a second consecutive drop in new orders in July. Moreover, in July, recruitment slowed to its lowest level since February amid cost-cutting initiatives, while backlogs fell at the fastest pace since May 2020. due to rising inflation and
recession fears. Finally, despite falling to a six-month low, input price inflation remained high, leading to a significant increase in output prices in July.
The US S&P Global Flash PMI fell to 47.0 in July from 52.7 in June. Meanwhile, the index of business activity in the US manufacturing sector from S & P Global Flash in July fell to 52.3 points from 52.7 points in June.
Commenting on the result, Chris Williamson, chief economist at S&P Global Market Intelligence, said:
“Preliminary PMI data for July point to a worrying deterioration in the economy. Barring the months of the pandemic, output is falling at a rate not seen since 2009 amid the global financial crisis, with survey data showing GDP falling at an annualized rate of about 1.0%. Manufacturing has stalled and the post-pandemic recovery in the services sector has been reversed as a tailwind of pent-up demand has been overcome by rising costs of living, higher interest rates and a growing gloom over the economic outlook.”
FocusEconomics Consensus Forecast experts predict GDP growth of 2.3% in 2022, which is 0.3 percentage points lower than the previous month’s forecast. In 2023, our panel predicts economic growth of 1.4%.