U.S. economy flexes muscles in June, S&P finds, and poised for 'robust end' to second quarter
By Jeffry Bartash
Businesses more optimistic about the economy
The numbers: The U.S. economy expanded in June at the fastest pace in more than two years, a pair of S&P surveys found, amid growing optimism among business leaders
The S&P flash U.S. services index of purchasing managers climbed to a 26-month high of 55.1 in June from 54.8 in the prior month. Numbers above 50 signal growth.
The flash U.S. manufacturing PMI, meanwhile, rose to a three-month high of 51.7 in June from 51.3 in May.
Purchasing managers buy supplies for their companies. They buy more when times are good and less when the economy sours.
The surveys are the first indicators of each month to give a sense of how well the U.S. economy is doing.
Key details: New orders, a sign of future sales, increased modestly in May. Employment levels also rose for the first time in three months.
The rate at which companies raise prices, meanwhile, fell to one of the lowest levels in four years, S&P found.
S&P chief business economist Chris Williamson said the recent deceleration in business selling prices would help the Federal Reserve to achieve its target of annual 2% inflation.
Big picture: The economy has slowed a bit after a surge in growth in the second half of 2023, but the S&P surveys suggest there's little sign of trouble.
What's made businesses more optimistic is easing inflation and the likelihood of borrowing costs turning lower later in the year.
The Fed has signaled it plans to cut interest rates by the fall if inflation continues to slow toward its 2% annual target.
Looking ahead: The S&P surveys "are a reassuring sign that the economy continues to grow, and is not in or near a recession," said chief economist Bill Adams of Comerica.
"Slow-and-steady economic growth is consistent with expectations for the Fed to begin cutting interest rates gradually in the second half of 2024," he said.
Market reaction: The Dow Jones Industrial Average rose, but the S&P 500 fell, in Friday trades.
-Jeffry Bartash
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
06-21-24 1106ET
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