U.S. business activity hits 27-month high amid consumer price resistance
Date
7/25/2024 5:19:44 AM
(MENAFN) In July, U.S. business activity surged to its highest point in 27 months, reflecting robust growth across various sectors. However, companies face significant challenges in sustaining elevated prices for goods and services due to growing consumer resistance. This resistance is likely contributing to rising inflation expectations. The preliminary composite Purchasing Managers' Index (PMI) for the U.S., which encompasses both manufacturing and services, increased to 55 points, marking the highest level since April 2022 and up from June’s 54.8 points. A PMI reading above 50 signifies growth in the private sector, highlighting an overall positive trend.
The notable increase in the PMI was largely driven by a rebound in the services sector, which showed significant improvement. Conversely, the manufacturing sector continued its downward trajectory, reflecting ongoing struggles within this part of the economy. Despite the overall growth, the rate of increase in average prices for goods and services decelerated to its slowest pace since January. This slowdown aligns with the U.S. Federal Reserve's target of 2 percent inflation, as noted by S&P Global Ratings.
This moderation in price increases is consistent with observations from major retailers who have reported consumer pushback against higher prices. It indicates a potential downward trend in inflation following the first decrease in consumer prices in four years observed in June. Overall, while business activity remains strong, the evolving inflationary landscape presents ongoing challenges for maintaining price stability and economic growth.
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