(Bloomberg) -- U.S. business activity stabilized in July, indicating only gradual progress for the economy as some states slow the pace of reopening to counter a pickup in coronavirus cases.
The IHS Markit preliminary composite index of purchasing managers at manufacturers and service providers improved 2.1 points to a six-month high of 50, the dividing line between expansion and contraction, the group reported Friday.
The data show the world’s largest economy is a step behind Europe, where PMIs improved markedly and showed expansion during the month. The composite index for the euro area climbed to the highest level since June 2018.
The U.S. composite index reflected ongoing contraction in service industries, albeit at a slower pace, as a resurgence in the virus outbreak prompted several states to restrict some activities such as dining out. At the same time, manufacturing expanded in July at the fastest pace since January, according to IHS Markit.
“While the stabilization of business activity in July is welcome news, the lack of growth is a disappointment,’’ Chris Williamson, chief business economist at IHS Markit, said in a statement. “Moreover, a renewed acceleration in the rate of loss of new business raises concerns that demand is faltering. Many companies, notably in consumer-facing areas of the service sector, linked falling sales to re-imposed lockdowns.’’
At the same time, the group’s composite measure of future activity advanced to the highest level since April 2019, indicating service providers and manufacturers were more upbeat about activity in the coming year.
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