July data pointed to another strong rise in U.S. service sector output, with the pace of expansion moderating only slightly from June‟s survey-record high. That said, the latest increase in new business volumes was the least marked for three months and service providers‟ confidence about the year-ahead business outlook slipped to the lowest since November 2012. Meanwhile, the latest survey indicated a moderation in input cost inflation and, as a result, average prices charged by service sector companies increased only marginally.
At 60.8 in July, the final seasonally adjusted Markit US Services Business Activity Index held close to the survey-record high registered in June (61.0). The earlier „flash‟ reading was 61.0 in July. The index has now registered above the neutral 50.0 value for nine months running and the latest reading indicated a sharp overall expansion of service sector output. Anecdotal evidence generally linked rising levels of business activity to sustained growth of new work and improving conditions across the domestic economy.
Volumes of new work received by service providers increased at a robust pace in July. However, in line with the trend for output, the rate of new business expansion eased from the post-crisis high seen in June. The latest rise in new work was the weakest since April, but still stronger than the average since the survey began in late-2009.
Slower new business growth contributed to a renewed reduction in outstanding business across the service sector in July. The marginal drop in unfinished work contrasted with a moderate accumulation of backlogs in each of the previous two months.
Higher levels of output and new work nonetheless contributed to a further increase in payroll numbers at service sector companies in July. Jobs growth has been recorded in each month since March 2010, but the latest reading was much lower than June‟s survey-record high. Meanwhile, service providers indicated the least marked degree of positive sentiment towards the business outlook for just over a year-and-a-half.
Input cost inflation eased for the first time in four months during July. The latest rise in cost burdens was also the slowest since April 2013. This in turn contributed to the weakest increase in service sector output charges for just over a year.
Eurozone Retail Sales Fall in July on France And Italy
Retail sales in the eurozone fell in July as France and Italy both saw accelerated contractions in trade, the latest PMI® figures from Markit showed. The fall in retail sales in the euro area was the most marked since May 2013 despite further, albeit slower, growth recorded in the currency bloc’s largest economy, Germany.
At 47.6, down from a neutral reading of 50.0 in June, the headline Markit Eurozone Retail PMI – which tracks month-on-month changes in like-for-like retail sales – pointed to a solid decrease in eurozone retail sales at the start of the third quarter. July’s survey also showed that sales were sharply down on the year, with the annual rate of decline the fastest in 14 months.
Underlying July’s decrease in eurozone retail sales were faster contractions in trade in both Italy and France. The former posted its most marked monthly decrease in like-for-like sales since February, having seen the pace of decline accelerate every month since May. France’s decrease in sales was the sharpest since May 2013 and the second in as many months. German retail sales on the other hand continued to grow, albeit at a much reduced rate compared with June’s near
three-and-a-half year high.Despite this renewed weakness, employment among eurozone retailers rose fractionally (on average) for the second month in a row. Indeed, the rate of job creation at German retailers was little changed from the solid pace seen in June, which was sufficient to offset further modest job losses in both France and Italy.
The level of spending among eurozone retailers on items for resale dipped for the second time in three months in July, having been stable during June. Stock levels rose nevertheless, the accumulation a reflection of sales having been lower than expected. Moreover, the shortfall in sales was the most marked since March 2013.
Cost pressures faced by retailers remained mild in the context of historical data, with wholesale price inflation running below the long-run series average having dipped in July. Details suggested that falling buying levels among French and Italian retailers weighed on the pricing power of their suppliers.July’s survey meanwhile highlighted a pessimistic outlook among retailers regarding their future performance, with sentiment the most negative for a year.
