Business growth continues to slow on rising uncertainty.
Purchasing Managers’ Index (PMI) data for June showed a surprise rise, hitting 53, against a 51.5 read in June. This is the second month in a row that the data has shown economic growth.
However, even as the hard numbers have shown a rise, business expectations hit a record low. This is the sixth month in a row for sliding confidence, reflecting the rising uncertainty in the economy throughout the year.
Digging into the data, there’s still some growth, albeit slowing growth. Business activity fell to 53.1 against a read of 58.2 last month.
New orders dropped from 55.8 to 54.1. Backlog fell from 56 to 53.5. Prices paid fell from 58.9 to 56.5.
PMI data uses a scale where 50 represents zero growth, and any number over 50 represents growth. Any number under 50 represents a decline.
So, the overall data shows that business continues to grow, albeit at a weaker pace, and with more uncertainty weighing on markets. The current data suggests that GDP growth has slowed to an annualized rate of under 2 percent, which would be the weakest level of GDP growth in three years. The drop in future expectations could also be an early indicator that the slowdown could accelerate, possibly to a recession, as trade war fears accelerate.