A wrap from Goldman. The deflation shock begins.
—
DM trends:
The DM composite flash PMI decreased by -1.8pt in June to 51.9 on a steep deceleration in services (-2.9pt to 52.5) and broad-based moderation in manufacturing (-1.6pt to 52.5).
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Country-level trends:

- The manufacturing flash PMI decreased sharply in the US (-4.5pt to 52.4) and decreased in the Euro area (-2.6pt to 52.0) and the UK (-1.2pt to 53.4). The manufacturing output flash PMI fell into contractionary territory in the US (-5.6pt) and the Euro area (-2.1pt) to 49.6 and 49.3, respectively.
- The services flash PMI increased in Japan (+1.5pt to 54.2) on a boost from tourism, but decreased in other DMs, especially in the Euro area (-3.3pt to52.8) and the US (-1.8pt to 51.6) as reopening gains slow.
Activity components:

- The DM flash forward-looking components decreased sharply for manufacturing with order-to-inventories at the lowest since May 2020 of0.94, and for services (future activity down by -5.0pt to 61.2), both consistent with broadly negative readings from US early business surveys.
- The composite flash employment PMI decreased in all major DMs, especially in the Euro area (-2.1pt to 53.9) and the US (-1.4pt to 54.8), except the UK where employment edged up by +0.4pt to 56.7.
Inflation-related components:

- The manufacturing suppliers’ delivery times component shortened substantially in all major DMs, especially in Australia (+4.7pt to 29.9), the Euro area (+3.7pt to 33.5), and the US (+2.0pt to 33.0), consistent with positive readings from US early business surveys.
- The DM output prices decreased by -3.5pt for manufacturing to 69.1 and by -2.9pt for services to 61.0 on a broad-based decrease across all major DMs except Japan, where services output prices reached a new pandemic high of 53.5
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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