US PMI Composite dipped slightly from 53.0 to 52.8, as PMI Services slipped to 53.1 from 53.7, offsetting a steady Manufacturing reading at 52.0. S&P Global’s Chris Williamson noted that while activity and new orders remained in positive territory, falling exports and heightened uncertainty—particularly around inflation—are starting to weigh on business sentiment.
Williamson pointed to stockpiling activity, especially in manufacturing, as a temporary support to demand, likely driven by concerns over tariffs and future supply disruptions. However, this inventory-driven boost could fade quickly, particularly if cost pressures remain elevated and begin to weigh on broader consumption.
A notable concern is that “inflationary pressures have risen sharply” in the past two months. Goods prices have risen at their fastest pace in three years. Service providers are also feeling the pinch, with food and input-related inflation filtering into final prices.
“The data therefore corroborate speculation that the Fed will remain on hold for some time to both gauge the economy’s resilience and how long this current bout of inflation lasts for,” Williamson added.
