US private-sector output growth reached an eight-month high in July amid services boost, though price pressures intensified due to disruptions caused by the Middle East conflict, S&P Global's (SPGI) flash purchasing managers' index showed Friday.
The composite output index increased to 53.6 this month from 51.9 in June, marking the fastest growth since November, the data provider said. The consensus was for a 52.2 reading in a Bloomberg-compiled survey. The 50-point mark separates expansion from contraction.
The gauge for services also rose to an eight-month high of 53.6 in July from last month's 51.2, while Wall Street expected a print of 51.5. The manufacturing PMI ticked down to a four-month low of 53.8 from 53.9. The Street projected a reading of 54.4.
"Some of this improvement may prove short-lived, as July saw hospitality spend boosted by the FIFA World Cup and USA 250 anniversary activities," S&P Global Market Intelligence Chief Business Economist Chris Williamson in a report. "It was also worrying -- though not unexpected -- to see manufacturing growth weaken as some of the stock building seen in prior months showed signs of fading."
Renewed tensions in the Middle East amid the US-Iran war saw supplier delays worsen to "the greatest extent" in almost four years, S&P said, adding that input cost inflation hit a 14-month high, while selling price inflation was close to a four-year peak.
"July saw a concerning intensification of supply chain delays and accompanying renewed upturn in price pressures, constraining growth and subduing demand," Williamson said. "Events over recent days in the Middle East will have only further exacerbated these supply chain and price worries and raise downside risks to the near-term outlook for the economy, hinting that July's upturn may not be the start of an improving trend,"
Employment increased "marginally" this month following two months of drops, with both manufacturing and services sectors seeing "modest gains," according to the report.
Business confidence in the year-ahead outlook reached an eight-month high in July. Services firms logged the strongest 12-month outlook since September, while manufacturing optimism hit the lowest since October, reflecting headwinds such as weaker demand growth and global trade concerns, the report showed.
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