The seasonally adjusted preliminary IHS Markit U.S. Composite Purchasing Managers’ Index fell to 55.9 in July, as services fell to a three month low of 56.2 and manufacturing rose to a two-month high 55.5.
Higher input costs were passed on to clients at the fastest pace since the combined manufacturing and services index was started in October 2009. Survey respondents cited higher fuel and raw material prices widely from the tariffs on steel and aluminum as the reason behind the increase in costs in July, according to the release.
“Trade frictions have clearly become a major cause of concern, especially among manufacturers. Firms have become increasingly worried about the impact of tariff and trade wars on demand, prices and supply chains,” said Chris Williamson, Chief Business Economist at IHS Markit.
The manufacturing component was little changed from June as both production volumes and employment numbers held firm. New Orders are down 3.4 points from April and exports orders were negative for the second month in a row. More than two years have passed since the last time export orders were negative for consecutive months.
Survey respondents widely commented on low stocks among suppliers and capacity constraints across the freight industry as the cause behind ongoing supply chain turmoil, which has dropped suppliers' delivery times index to the lowest level in 11 years of data collection. Supply chain delays are “usually a harbinger of further price rises,” said Williamson.
© Copyright 2023 Bloomberg News. All rights reserved.