S&P Global’s June flash PMI report showed U.S. business activity accelerated for a third straight month, led by the strongest manufacturing production growth in nearly five years.
By yourNEWS Media Newsroom
U.S. business activity strengthened in June as manufacturers reported faster output, rising new orders and a sharp increase in inventory building tied partly to concerns over supply chains and prices.
S&P Global said its flash composite purchasing managers index rose to 52.2 in June, up from 51.5 in May. The reading marked a five-month high and came in stronger than economists had expected.
The composite index reflects activity across both the services and manufacturing sectors. S&P Global’s flash PMI readings are based on preliminary survey responses from supply chain managers and corporate executives.
Manufacturing drove much of the improvement. The flash manufacturing PMI climbed to 55.7 in June from 55.1 in May, reaching its highest level since May 2022. The index has now risen for four consecutive months. Readings above 50 indicate expansion.
Economists had expected the manufacturing index to decline.
Factory production rose at the fastest pace since July 2021, while new orders posted their largest increase since April 2022. The stronger readings reflected improved demand as well as precautionary purchases by companies worried about supply disruptions and rising prices linked to the Iran war, according to S&P Global.
Businesses sharply increased purchases of inputs in June, with buying activity rising at the fastest pace since September 2021. Input inventories also climbed at the fastest rate in the survey’s nearly 20-year history, excluding the inventory surge that followed the announcement of tariffs in 2025.
The buildup suggests companies are preparing for stronger demand or guarding against possible supply shortages. Economists sometimes describe that pattern as “expansionary uncertainty,” when businesses respond to uncertain conditions by increasing investment, purchases or inventories to avoid lost sales or gain an advantage over competitors.
The services sector also expanded in June, though growth remained relatively subdued. S&P Global said new orders and output increased only modestly. Some service providers reported support from World Cup-related activity, but many continued to cite elevated prices, high interest rates and weak confidence among business and consumer customers.
Supply chain pressures also persisted. Delivery delays became more common in June, with supplier delivery times lengthening by the greatest amount since August 2022.
Input costs rose sharply, though not as quickly as in May. Average prices charged for goods and services increased at a rate matching May’s hot inflation reading, which had been the highest since July 2025. Goods price inflation cooled slightly but remained elevated, while service-sector selling price inflation rose to an 11-month high.
Employment remained a weak spot in the report. Payrolls contracted for a second consecutive month as companies focused on reducing costs amid higher input prices.
S&P Global said service-sector headcounts fell only modestly, while manufacturing employment declined at the fastest pace since the pandemic lockdowns.
Those findings contrast with official government labor data, which showed employment growing for three consecutive months through May at an average of 188,000 jobs per month.
Despite concerns over prices, supply chains and labor cuts, business expectations improved. Companies’ outlook for output over the next year rose to the strongest level since February, with sentiment improving in both manufacturing and services.
S&P Global said part of the brighter outlook was tied to hopes that war-related disruptions and price pressures would ease. Last week, the United States and Iran announced a preliminary agreement to end the war between them.
The June report points to a U.S. economy still expanding despite inflation pressure, high borrowing costs and geopolitical uncertainty, with manufacturers showing the strongest momentum in nearly five years.
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