Background on Key Figures and Context
The United States’ business activity experienced a marginal slowdown in June, despite prices continuing to rise due to President Donald Trump’s aggressive tariffs on imported goods. This situation suggests a potential acceleration of inflation in the second half of the year.
Who is Donald Trump and why is he relevant?
Donald J. Trump served as the 45th President of the United States from January 20, 2017, to January 20, 2021. Known for his business background and reality TV fame, Trump implemented a “America First” policy that included imposing tariffs on various imported goods to protect domestic industries. His trade policies have had significant impacts on businesses and consumers in the U.S. and abroad.
Key Developments in US Business Activity
The S&P Global composite PMI for US production, which tracks both the manufacturing and services sectors, fell to 52.8 points in June from 53 points in May.
A reading above 50 points indicates expansion within the private sector. However, the recent data shows that price measures for factories paying for inputs and charging for finished products have surged to levels last seen in 2022.
Nearly two-thirds of manufacturers reporting increased input costs attributed this to tariffs, while more than half of the surveyed businesses linked rising selling prices to the tariffs, according to S&P Global.
Economists anticipate that inflation will rise starting from June, as consumer and producer prices have remained relatively benign in recent months. The delayed response of inflation to tariffs is due to businesses selling off accumulated stocks before the tariffs took effect.
Chris Williamson, Chief Economist at S&P Global Market Intelligence: “The data indicates that the U.S. economy continued to grow in late Q2, but uncertainty persists while inflationary pressures have increased sharply over the past two months.”
Business Activity in the Eurozone
Nearly Flat Activity
In contrast, business activity in the Eurozone increased slightly in June, marking the sixth consecutive month of expansion albeit at a slow and decelerating pace.
S&P Global’s Flash PMI HCOB registered at 50.2 points, the same as May. Previous month’s figures were revised upwards after initially showing a decline.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank: “The eurozone economy struggles to gain momentum. For the past six months, growth has been minimal, with stagnant activity in the services sector and moderate production growth in manufacturing.”
Key Questions and Answers
- Who is Donald Trump and why is he relevant to this news? Donald J. Trump was the 45th President of the United States, known for his business background and reality TV fame. His trade policies, including aggressive tariffs on imported goods, have impacted the US and global businesses.
- What does the decline in the US composite PMI indicate? The decrease from 53 points in May to 52.8 points in June suggests a marginal slowdown in the US business activity, with both manufacturing and services sectors experiencing expansion.
- Why are prices rising despite the slowdown? Prices have increased due to Trump’s tariffs on imported goods, with manufacturers and businesses attributing nearly two-thirds of input cost increases to tariffs. This situation supports economists’ expectations of rising inflation in the second half of 2019.
- What is the status of business activity in the Eurozone? Business activity in the Eurozone expanded for the sixth consecutive month, though at a slow and decelerating pace. The minimal growth is attributed to stagnant service sector activity and moderate manufacturing production increases.
