U.S. June S&P PMIs - Manufacturing stronger still, Services less subdued
June’s preliminary S and P PMIs ae both improved, manufacturing impressively so at 55.7 from 55.1. Services are still subdued but at 51.3 from 50.7 are at their highest since February.
The manufacturing strength suggests May’s acceleration in the ISM manufacturing index can be sustained despite May manufacturing output and June’s Empire State and Philly Fed surveys being less impressive. Manufacturing continues to be supported by heavy investment in AI. The latest index is the highest since May 2022.
The services index has been subdued since gasoline prices surged on the Middle East conflict, and the modest improvement in June may reflect gasoline prices coming off their highs. Further slippage is likely in Q3 which could support the index further, but this is not a reliable signal for the ISM services index, which has been outperforming the S and P services PMI recently.
