(Bloomberg) -- US business activity accelerated in early July at the fastest pace in more than two years on stronger services demand, while a gauge of prices received cooled.
The S&P Global flash July composite output index ticked up 0.2 point to 55, the highest since April 2022. Figures higher than 50 indicate expansion. While the measure of activity at service providers showed the fastest growth since March of that same year, manufacturing slipped back into contraction territory.
An index of new business at service providers improved to the highest level in a year. The report points to an economy that continues to grow at the same time companies have limited capacity to pass on higher costs.
The composite measure of prices paid for inputs, including rising shipping costs and higher wages, climbed. Even so, growth in output prices slowed to a six-month low.
“The flash PMI data signal a ‘Goldilocks’ scenario at the start of the third quarter, with the economy growing at a robust pace while inflation moderates,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
“From the output perspective, growth has become worryingly skewed, with manufacturing slipping back into contraction as the service sector gains further strength,” Williamson said.
Moreover, the index of employment across service providers and manufacturers showed headcounts barely grew during the month.
The report surfaces ahead of Thursday’s initial estimate of second-quarter gross domestic product. Those figures are projected to show healthy economic growth, albeit at a more moderate pace compared with the second half of last year.
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