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S&P Global On Firms' Reluctance To Fully Pass On Higher Costs

DATA REACT
  • S&P Global composite PMI revised 0.2pts lower in the final release, leaving a decline from 56.0 to 53.6 in May.
  • Press release excepts: It signals “a solid but slower upturn in private sector business activity. The softer rise in output reflected slower increases in the manufacturing and service sectors, amid hikes in selling prices and supply-chain disruption.”
  • “Although the pace of input price inflation quickened to a series high, there was evidence of a hesitancy to completely pass higher costs on, as output charges rose at a softer pace.”
  • The reaction is limited whilst waiting for ISM Services shortly, but it helps front-end Tsys continue to slowly retrace the cheapening seen on payrolls, with 2Y yields now around 3bps higher since pre-payrolls at 2.665%, having touched a high of 2.685%.

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