U.S. business activities fell to a three-month low in June as services growth slowed for the first time this year and the contraction in the manufacturing sector deepened, survey data showed on Friday.
The overall picture, however, shows US economic growth picked up in the second quarter despite persistent concerns that the Federal Reserve's aggressive interest rate hikes over the past year will trigger a recession.
The U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to a reading of 53.0 this month, the lowest since March. However, it was the fifth consecutive month the PMI remained above 50, indicating growth in the private sector.
The survey data, collected between June 12-22, adds to the evidence that the U.S. economy continued to expand in the April to June period, although it increasingly relied on the broad services sector for overall growth in gross domestic product.
"The overall rate of expansion of business activity in the US remained robust in June, consistent with GDP rising at a rate of 1.7% to put second-quarter growth in the region of 2%," said Chris Williamson, chief business economist at S&P Global.
Williamson said the Fed's decision last week to rule out a rate hike at its first meeting since it began hiking in March 2022 bolstered confidence in services businesses, but any further hikes could hurt a sector that has been the sole driver of growth.
The S&P Global survey's measure of new orders received by private businesses slipped to 53.5 this month in June from 54.3 in April, with the services sector keeping the key metric above 50. New orders in manufacturing fell to a six-month low.
The survey's flash services sector PMI fell to 54.1 from 54.9 in May. Economists polled by Reuters had forecast the services PMI to ease to 54.0.
