(Kitco News) - Recession fears continue to build in the U.S. as preliminary data showed mixed activity within manufacturing and service sectors in July.
Friday, the S&P Global Flash US Composite PMI reported roughly in-line activity for the manufacturing sector and slowing momentum within the service sector. The report said that the manufacturing PMI data came in at 52.3, down from June’s reading of 52.7. The data was slightly better than expected; according to consensus estimates, economists were looking for a reading around 22.0.
Meanwhile, activity in the service sector was weaker than expected falling to contraction territory at 47., down from June’s reading at 52.7. Economists were looking for a print around 52.6.
The gold market is holding on to strong gains in initial reaction to the latest economic data. The market continues to see a solid technical bounce after briefly falling below critical support at $1,700 an ounce. August gold futures last traded at $1,734.50 an ounce, up 1.23% on the day.
Readings above 50 in such diffusion indexes are seen as a sign of economic growth and vice-versa. The farther an indicator is above or below 50, the greater or smaller the rate of change.
Although the manufacturing sector remain in expansion territory, the report noted that activity has dropped to its lowest level in 24 months. At the same time activity in the service sector has dropped to a 26-month low.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said that the latest data does not bode well for future growth.
“The preliminary PMI data for July point to a worrying deterioration in the economy. Excluding pandemic lockdown months, output is falling at a rate not seen since 2009 amid the global financial crisis, with the survey data indicative of GDP falling at an annualised rate of approximately 1%,” he said. “Manufacturing has stalled and the service sector’s rebound from the pandemic has gone into reverse, as the tailwind of pent-up demand has been overcome by the rising cost of living, higher interest rates and growing gloom about the economic outlook.”
