The prices had decreased to 85.7 (-6.4) but still remained high because of persistent high freight costs, high crude prices, and high material prices which still maintained the supplier’s deliveries at a high level of 72.5 (-2.6) as a higher number indicated slower deliveries. The producers had a reduction on their inventories (48.9, +2.2) because of freight issues and higher costs which drove them to increase local raw material usages (Est’d +5.1).
The producers increase their employment to prepare for Q4 festival orders. However, the supplier’s deliveries impeded their production capabilities (58.4, -2.4) and this caused further declines in the customers’ inventories. My primary concern would be the declines in new order (64.9, -1.1), new export order (55.7, -0.5) and new local order (Est’d -0.6) because these 3 indicators showed that overseas and local consumers were cutting back on their spendings. Since the local consumption constituted 70% of the US GDP, a significant pull-back would affect the GDP growth tremendously.
The backlog of order increased to 65 (+0.5) because the producers couldn’t increase their production to meet customers’ demands due to supply chain disruption problems.
All the above factors caused the PMI to decrease to 59.5 (-1.1) which was the lowest since February 2021. In conclusion, the June PMI indicated that the US economic growth was in a downward trajectory and would experience a diminishing marginal GDP growth in the future.
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