Service PMIs See Slower Growth And Higher Output Charge Inflation

• The S&P Global US Composite PMI was softer than expected in the preliminary July report at falling to 52.0 (cons 53.0) from 53.2.
• Manufacturing was stronger than expected at 49.0 (cons 46.2) after 46.3 with the surprise instead lead by services at 52.4 (cons 54.0) after 54.4. This discrepancy on the month was seen clearly with service job creation lagging but against a pick up in output charge inflation.

Details:

• Total new orders remained in expansion territory but increased at a softer pace and with export orders doing the heavy lifting: “A sustained rise in new export orders for services helped support the upturn as domestic demand lost some momentum, often due to higher interest rates."
• Prices: "Elevated cost pressures continued to be led by the service sector. However, manufacturers saw a renewed rise in input prices, and services firms reported a slower uptick in operating expenses."
• Notably “The rate of output charge inflation meanwhile picked up in July. Firms sought to pass through higher costs and increased interest rate payments to customers, with the overall rise driven by service providers.”
• Softer labor: "The rate of job creation was only marginal, however, and the weakest since January.” Goods producers registered the stronger uptick in staffing numbers. “Some manufacturing companies noted that the solid rise in payrolls was due to greater ease of hiring, with some also mentioning an improvement in employee retention and improved confidence in the outlook. In contrast, services firms reported the slowest rise in employment for six months" [...] "some firms also noted a lack of skilled candidates for open vacancies."