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Production, service PMI decline for multi-year recessions in June



Bloomberg

A worker uses a power drill to mount round balers on New Holland Ltd. Haytools factory in New Holland, Penn.

Figures: IHS Markit said its purchasing manager's index fell to 50.1

in June from 50.5 in May, the worst reading since September 2009.

Currently, the index of flash service managers in June to 50.7 from 50.9, the worst reading since March 2016.

Any reading over 50 indicates improved conditions. The flash estimate is typically based on approx. 85% -90% of total survey responses each month.

What happened: The private sector's production growth has lost momentum every month since February, said IHS Markit. Production volumes hardly increased and respondents noted "greater risk aversion."

The recent increase in wages was the weakest for more than two years when "anecdotal evidence suggested that increased economic uncertainty had served as a brake on hiring staff."

The big picture: Concerns about trade as well as failing global growth have taken their toll. In the euro area, flash production rose PMI, but was still below 50 market indicating contraction. Japan's flash production PMI fell slightly and was also below the 50 mark.

Market reaction : US shares

SPX, -0.13%

was slightly weaker Friday after hitting a record in the previous session. On expectations, the Federal Reserve will soon lower interest rates. The decline in mood will play in expectations of imminent relaxation and the yield on the 2-year note

TMUBMUSD02Y, -1.23%

decreased slightly to 1.78%.


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