By Scott Kanowsky
Investing.com -- U.S. business activity contracted for the first time in more than two years in July, according to a closely watched survey of companies, as weak service sector performance and a decline in manufacturing production added to fears of a broad economic downturn in the world's biggest economy.
S&P Global said its U.S. flash purchasing managers' index - a measure of momentum in business activity - slumped to 47.5 during the period, the lowest level in 26 months and the first sub-50 reading since June 2020. Any figure below 50 denotes contraction.
Firms revealed that new orders grew modestly in July, but complained that client demand has been strained by soaring inflation and rising interest rates.
Input costs at suppliers also ticked higher due to surging fuel, transportation and raw material expenses. But signs are beginning to emerge that price hikes are easing back from their May peak, S&P Global said.
“Although supply constraints remained problematic, constraining economic activity, the weakening demand environment has helped to alleviate inflationary pressures," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Meanwhile, the outlook for a revival in demand darkened in July. Company expectations for the future tumbled to the lowest since the early days of the pandemic, according to S&P Global, forcing some businesses to reassess their staff sizes and overall strategies.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.