Private-sector output growth slowed to a more than three-year low in June as both services and manufacturing gauges fell more than expected.
The IHS Markit Flash US Composite Output purchasing managers’ index came in at 50.6 in June from 50.9 the month before, missing the consensus on Econoday for a reading of 50.6.
The services PMI business activity index slipped to 50.7 from 50.9 in May while the manufacturing PMI hit 50.1, the lowest level since September 2009 and down from 50.5 in May.
“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%,” said Chris Williamson, chief business economist at IHS Markit.
Williamson said business sentiment for the year ahead has fallen “amid intensifying worries about tariffs, geopolitical risk and slower economic growth in the months ahead.”
He said the labor market is showing signs of a slowdown with the June survey indicating nonfarm payroll growth of 140,000 and averaging 150,000 in the second quarter after signalling 200,000 in the first quarter.
“Prices for goods and services, meanwhile, rose at a slightly increased rate in June, mainly due to tariffs,” he said, adding that two-thirds of manufacturers blamed tariffs for higher costs for raw materials. “However, the inflationary impact of tariffs was offset by a broader softening of demand, which reduced suppliers’ pricing power.”
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