U.S. economic activity peaks in June, driven by improved employment, easing price pressures
Date
6/23/2024 4:49:31 AM
(MENAFN) In June, the United States witnessed a significant surge in economic activity, reaching its highest point in 26 months. This uptick was primarily fueled by an increase in hiring and a notable reduction in price pressures, which has fostered optimism about the sustainability of the recent slowdown in inflation. According to a preliminary report released by Standard & Poor's Global on Friday, the composite Purchasing Managers' Index (PMI) for US production, which encompasses both the manufacturing and services sectors, climbed to 54.6 this month. This marks the highest level recorded since April 2022, and slightly above the final reading of 54.5 in May. It's important to note that a PMI above 50 indicates growth, while a reading below 50 signifies contraction. The boost in both the services and manufacturing sectors contributed to this increased activity.
Despite the promising PMI figures suggesting a robust economic performance as the second quarter drew to a close, other quantitative data present a more nuanced picture. Retail sales showed minimal growth in May, following a decline in April. Furthermore, new home construction continued its downward trajectory, hitting its lowest point in almost four years as of May. This mixed economic landscape emerges in the context of the US Federal Reserve's aggressive interest rate hikes, totaling 525 basis points since 2022, aimed at curbing inflation. As inflationary pressures ease, the economy's loss of momentum raises the possibility of a rate cut later this year. Since last July, the Federal Reserve has maintained the benchmark overnight interest rate within the range of 5.25 to 5.50 percent.
Additionally, a survey by Standard & Poor's Global indicated a rise in new orders for private companies, with the measure increasing to 53.4 in June from 51.7 in May. This suggests that despite some signs of economic slowdown, there remains a healthy demand within the private sector, reinforcing the mixed yet cautiously optimistic outlook for the US economy.
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