Missing by the most on record (as serial extrapolators expected a rise to 56.5), Markit US Services PMI (following weakness in the Manufacturing PMI) printed 54.8 - the lowest since the middle of weather carnage in January. As Markit notes, with the exceptions of the weather-related slowdown at the turn of the year and the 2013 government shutdown, June saw the weakest pace of economic growth since May 2013 as the Composite PMI slipped to 54.6 - its lowest since January 2015 (as employment tumbled and cost burdens surged the most since Oct 2013). As Markit conludes, hopes for a 3.00% growth are receding as "there has clearly been a loss of momentum in recent months."
[3]
Signaling growth expectations are way ahead of themselves again...
[4]
Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said: [5]
A slowdown in the economy at the end of the second quarter may mean the Fed takes a further pause for thought before hiking interest rates.
The latest flash PMI surveys showed the smallest rise in service sector activity since January and the slowest growth of factory output for over a year and a half, linked to the strong dollar.
With the exceptions of the weather-related slowdown at the turn of the year and the 2013 government shutdown, June saw the weakest pace of economic growth since May 2013.
While the surveys point to the economy growing at an annualised rate of around 3% in the second quarter as a whole, there has clearly been a loss of momentum in recent months. With June also seeing one of the smallest increases in new orders recorded over the past two years, the surveys suggest that GDP growth could slow appreciably in the third quarter.
Although the PMI data also point to employment rising strongly again in June, consistent with another 200,000-plus rise in non-farm payrolls, hiring is likely to cool in coming months in response to weaker order book growth.
The big question is whether these signs of the economy losing momentum will buy more time at the Fed, pushing out the first rate hike into next year, or whether policymakers will be persuaded into hiking sooner due to the current strength of the labour market, robust second quarter economic growth and reviving price pressures.”
Charts: Bloomberg
