• Prior 51.0
• Manufacturing PMI 55.7 vs 54.8 expected
• Prior 55.3
• Composite PMI 52.2 vs 51.7 prior
• Employment fell for a second month running
• Companies’ expectations for output in the year ahead
  improved in June to the brightest since February

That’s a 49-month high for manufacturing but on the composite side, overall growth is still sluggish and the report says companies cut back on staffing. Good news was on prices which showed signs of cooling from sizzling-hot levels.

Chris Williamson, Chief Business Economist at S&P
Global Market Intelligence said there was sluggish service sector growth contrasting with
an increasingly solid manufacturing expansion.

“Brighter news out of the Middle East has helped restore
some confidence among US businesses in June, though
the overall rate of economic growth signalled by the flash
PMI survey remains relatively sluggish compared to that
seen earlier in the year in the lead up to the conflict. The
survey signals that current output levels are consistent
with the economy struggling to grow much faster than a
1% annualized rate in the second quarter.
“The service sector continues to grow at an especially
subdued pace, reflecting push-back from customers
over high prices amid low levels of consumer confidence
in particular. While there is better news from the
manufacturing sector, we remain concerned as factory
growth continues to be temporarily buoyed by inventory
building amid supply fears. Supply delays grew more
widespread in June.
“Most worrying was the further fall in employment,
notably in the manufacturing sector. Factory job cuts
are running at the highest since 2009 if the pandemic
is excluded, reflecting concerns over the sustainability
of the recent upturn in demand alongside worries over
the escalating cost of raw materials. However, while still
running at one of the highest rates seen over the past four
years, input cost inflation has shown sign of cooling in
June thanks in part to the lower energy prices seen at the
tail end of the survey data collection period.”

For background, the S&P Global US PMIs are monthly surveys of senior purchasing and operating executives at private-sector companies, run separately for manufacturing and services and combined into a headline composite. They are produced by S&P Global Market Intelligence, the operation that absorbed IHS Markit, and are modeled on the same diffusion-index methodology used across its global PMI franchise covering more than 40 economies.

The “flash” releases are preliminary estimates published roughly a week before month-end, based on about 75% to 85% of the total monthly survey responses. Final readings follow at the start of the next month once the remaining replies are collected. The flash is among the earliest cyclical reads on a given month, which is the main reason markets watch it.

Each index is built from panel responses comparing current conditions to the prior month, scored on a 0-to-100 scale where 50 marks the line between expansion and contraction. The manufacturing PMI is a weighted composite of five subindices: new orders, output, employment, suppliers’ delivery times, and stocks of purchases. The services PMI headline is the business activity index. Both surveys also publish detail on new orders, employment, input and output prices, backlogs of work, and twelve-month output expectations.

The manufacturing panel covers around 800 companies; the services panel is larger. Responses are weighted by company size and sector contribution to GDP. The composite output index blends manufacturing output and services activity, weighted by each sector’s share of value added.

In the US specifically, the S&P Global manufacturing gauge competes for attention with the older, more widely cited ISM manufacturing index, and the two can diverge meaningfully because of differences in panel composition, sector weighting, and seasonal adjustment. The services figures likewise sit alongside the ISM services report. Data are seasonally adjusted, and a sister price index feeds inflation watchers.