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The start of the third quarter saw a deterioration in business conditions at US manufacturers as new orders declined for the first time in three months. Work on outstanding business and a near-record replenishment of stocks of finished goods helped to keep output rising, although the pace of expansion was only marginal. Employment also rose at a slower pace. Output prices increased only marginally and at the slowest pace for a year, despite a further marked increase in input costs. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers' Index (PMI) fell to 49.6 in July from 51.6 in June, below the 50.0 no-change mark for the first time in seven months and signaling a slight deterioration in the health of the manufacturing sector. Central to the worsening of overall business conditions was a first reduction in new orders for three months. New business decreased solidly, and at the fastest pace in 2024 so far. Rises in output also contributed to an increase in stocks of finished goods as some firms looked to build inventories in anticipation of future demand improvements. Input costs increased markedly in July amid reports of higher prices for energy, freight, labor and raw materials. Purchasing activity decreased for the second month running, with firms reluctant to purchase additional inputs given falling new orders and rising prices. Reduced demand for inputs led some suppliers to speed up deliveries, but this was cancelled out by shortages of staff and materials, plus shipping delays. Supplier performance was therefore broadly unchanged in July. Powered by Commodity Insights
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