PMI business surveys: Growth continues in major economies, inflation outlook varies

S&P Global (formerly Markit) June PMI data, which keeps the pulse of the world economy on a monthly basis, was announced today. These are preliminary data compiled from a limited number of companies. The latest information will be announced at the beginning of July. Values ​​above 50 indicate continued growth and/or increase.

Information from the USA, Eurozone, Japan, India and the UK indicates that economic activity continues to expand at different speeds, but the Eurozone is losing momentum once again. The USA announced much stronger results than expected. India is breaking speed records.

US S&P Global Composite PMI rose to 54.6 in June flash assumption from 54.5 in May; This showed that business activity in the US private sector continues to expand at a healthy pace.

While S&P Global Manufacturing PMI increased from 51.3 to 51.7 in the same period, Services PMI increased from 54.8 to 55.1. Both of these metrics came in above analysts’ assumptions.

Evaluating the findings of the survey, S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “Preliminary PMI data points to the fastest economic expansion in more than two years in June and indicates that the second quarter will end in an encouragingly strong manner.”

Akbank Economic Research Team commented on other leading PMIs announced today as follows:

According to the leading PMI data for June, which started to be announced today, Japan’s manufacturing industry PMI maintained its course above the 50 threshold level. In India, the index increased along with all its sub-components, indicating that global demand was strong. However, the manufacturing industry PMI in both Germany and France reached the lowest levels in the last 2 months, pushing the index for the Euro Zone (EB) to the lowest level in 6 months.

When the manufacturing industry PMI data is examined across EB; It is seen that new orders decreased for the first time in the last 4 months, and business activities and employment indices expanded moderately for this reason. The headline index has been below the 50 threshold level since July 2022. Additionally, business confidence fell to its lowest level since February in June, after reaching a 27-month high in May. Input cost and output price inflation rates are at their lowest levels in the last 6 and 8 months, respectively. Despite these developments, the fact that the composite PMI remained above the 50 threshold level for 4 consecutive months as a result of the positive trend in the services section indicates that the growth in EB may continue, albeit moderately.

There is a general decline in regional stock indices today. Among the sectors leading the decreases are finance, IT, commodities and industry. Although the European Central Bank (ECB) reduced the political interest rate by 25bps as a result of the MPC meeting held on June 6, the decline in the overall PMI compiled between 12-19 June underlines that the effect of the interest rate cut did not spread to the departments.

In the UK, the composite PMI showed its most measured increase since November 2023. The pause in service branch expenditures due to the early elections to be held in the country was effective in bringing the index to its lowest level in the last 7 months. While the manufacturing industry PMI reached its highest level in the last 23 months, the increase in new orders made a significant contribution to the rise. While the employment index continued its moderate increase, input costs accelerated from the lowest level in the last 40 months recorded in May. While the prices reflected to the consumer reached the highest level in the last 4 months, the highest sales price level was recorded in the manufacturing industry since May 2023. Even though the increase in the Consumer Confidence Index compared to May, the strong course of the Retail Sales Index on a monthly basis and the fact that the Bank of England (BoE) did not change its claims for the 2024-2026 period regarding the policy rate and inflation at the MPC meeting held this week, may lead to an increase in interest rate cut expectations. It is insufficient to prevent the sales seen after the PMI data in the stock markets. As the article was being prepared for publication, the FTSE100 index provided a weekly return of 0.6%. The decrease on a daily basis is around 1%.