PMI: US services industry extends resurgence into June
The US services industry extended its resurgence from the troughs of the Covid pandemic into June, according to a closely watched business survey released today.
The IHS Markit US Services PMI reached 64.6 in June, the third highest since the survey began and only behind May and April’s readings of this year.
A reading above 50 indicates businesses reported an expansion in activity.
Read more: PMI: Eurozone business activity grows at fastest pace for 15 years
The lifting of Covid restrictions in most US states in June triggered a surge in consumer spending in leisure and hospitality businesses. The speed of expansion in new business was the third fastest since the survey began, while output growth was also strong.
Orders from customers abroad was robust, showing that worldwide demand is recovering as economies across the globe wind down Covid prevention measures.
The US Composite PMI Output Index, which measures services and manufacturing activity, was 63.7 in June, the second-fastest rate of expansion on record.
Chris Williamson, chief business economist at IHS Markit, says: “June saw another month of impressive output growth across the manufacturing and services sectors of the US economy, rounding off the strongest quarterly expansion since data were first available in 2009.”
“The rate of growth cooled compared to May’s record high, however, adding to signs that the economy’s recovery bounce peaked in the second quarter.”
Inflationary pressures intensify
US services firms are struggling to cope with surging input costs, the survey revealed.
Input costs climbed at the second-fastest pace on record in June, a trend that is being mirrored in the UK and Europe.
Firms passed on these higher costs to consumers at the second-steepest rate on record, indicating that consumers are not being deterred from spending even if they have to swallow higher prices.
Swelling backlogs caused by surging new order inflows put firms under intense pressure to increase supply. The level of outstanding business expanded at the sharpest rate for ten months.
Labour shortages reportedly exacerbated strains in meeting demand.
“Capacity constraints are not only stifling growth, but also driving prices sharply higher” Williamson added.
Read more: UK services sector continues recovery amid mounting inflation fears