In June, US PMI Manufacturing dropped to 50.1 in June, down from 50.5 and missed expectation of 50.5. That’s the lowest level in 117 months. PMI Services dropped to 50.7, down from 50.9 and missed expectation of 51.0. That’s the lowest level in 40 months. PMI Composite dropped to 50.6, down from 50.9, a 40-month low.
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“Business activity edged closer to stagnation in June, expanding at the slowest rate since February 2016 and rounding off a second quarter in which the survey data point to the pace of economic expansion slipping to 1.4%.
“Recent months have seen a manufacturing-led downturn increasingly infect the service sector. The strong services economy seen earlier in the year has buckled to show barely any expansion in June, recording the second-weakest monthly growth since the global financial crisis.
“Business optimism has also become more subdued, with sentiment about the year ahead down to a new series low amid intensifying worries about tariffs, geopolitical risk and slower economic growth in the months ahead.
“The labor market is also showing signs of weakening. The survey data for June indicate non-farm payroll growth of 140k,averageing 150k in the second quarter after a 200k signal for the first three months of the year .
“Prices for goods and services meanwhile rose at a slightly increased rate in June, mainly due to tariffs. To illustrate, some two-thirds of all manufacturers attributed some or all of their raw material cost increases to tariffs during the month. However, the inflationary impact of tariffs was offset by a broader softening of demand, which reduced suppliers’ pricing power. The overall rate of input cost inflation in manufacturing eased to a two-year low, while average selling prices for goods and services showed one of the smallest rises seen since late-2016.”
Full release here.
Italy Tria: 2.1% deficit represented a more than prudent fiscal policy
According to a prepared speech for delivery today, Italian Economy Minister Giovanni Tria said “for a zero growth economy like Italy” a 2.1% deficit represented “a more than prudent fiscal policy”.
He added that the country is targeting to keep deficit low in the coming years. And the government will continue to lower its debt through reducing spending. Thus, “on this basis, we feel that Italy is substantially compliant with European fiscal rules.” Tria is also confidence of reaching an agreement over its budget with the EU.
EU leaders are expected to approve the so-called Excessive Deficit Procedure on July 8-9 summit, which would lead to penalty to Italy over its budget. It’s reported that European Commission would give Italy until January to make necessary budget corrections.