US Business Activity Inches up in June; Price Pressures Abating

A worker assembles parts of a Tundra Truck at Toyota's truck plant in San Antonio, Texas, US, April 17, 2023. (Reuters)
A worker assembles parts of a Tundra Truck at Toyota's truck plant in San Antonio, Texas, US, April 17, 2023. (Reuters)
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US Business Activity Inches up in June; Price Pressures Abating

A worker assembles parts of a Tundra Truck at Toyota's truck plant in San Antonio, Texas, US, April 17, 2023. (Reuters)
A worker assembles parts of a Tundra Truck at Toyota's truck plant in San Antonio, Texas, US, April 17, 2023. (Reuters)

US business activity crept up to a 26-month high in June amid a rebound in employment, but price pressures subsided considerably, offering hope that a recent slowdown in inflation was likely to be sustained.

S&P Global said on Friday that its flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, nudged up to 54.6 this month.

That was the highest level since April 2022 and followed a final reading of 54.5 in May. A reading above 50 indicates expansion in the private sector. Both the services and manufacturing sectors contributed to the gain in activity.

The elevated composite PMI reading suggests that the economy ended the second quarter on a solid note. So-called hard data, however, paint a different picture. Retail sales barely rose in May after falling in April. Housing starts extended their decline, hitting the lowest level in nearly four years in May.

The economy is slowing following 525 basis points worth of interest rate hikes from the Federal Reserve since 2022 to tame inflation. The loss of momentum together with easing inflation pressures are keeping a rate cut this year on the table.

The US central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range since last July.

The S&P Global survey's measure of new orders received by private businesses increased to 53.4 this month from 51.7 in May.

Its measure of employment rose for the first time in three months amid what S&P Global said was "improved business confidence for the year ahead" as well as "renewed pressure on operating capacity from rising demand."

The drop in the prior months had raised fears among some economists of a looming sharp slowdown in job growth. So far the labor market has continued to churn out jobs at a solid clip.

The pace of increase in input prices slowed as did the rate at which businesses are raising prices for goods and services.

The prices paid for inputs measure dropped to 56.6 from 57.2 in May. The output prices gauge fell to a five-month low of 53.5 from 54.3 in May. The moderation was in both manufacturing and the services sector, where the rise was among the slowest over the past four years.

"Historical comparisons indicate that the latest decline brings the survey's price gauge into line with the Fed's 2% inflation target," said Chris Williamson, chief business Economist at S&P Global Market Intelligence.

Inflation moderated in May, with the consumer price index unchanged for the first time in nearly two years.

The survey's flash manufacturing PMI edged up to 51.7 this month from 51.3 in May. Economists polled by Reuters had forecast the index for the sector, which accounts for 10.4% of the economy, dipping to 51.

S&P Global said "manufacturers' commonly cited concerns over the demand environment in the months ahead as well as election-related uncertainty, notably relating to policy."

Its flash services PMI increased to 55.1, a 26-month high, from 54.8 in May. That exceeded economists' expectations for a reading of 53.7.



Egypt Raises Domestic Fuel Prices by up to 15% before IMF Review

This picture taken on March 20, 2024 shows a view of the Cairo University bridge across the Nile river connecting Cairo (R) with its twin city of Giza (L). (AFP)
This picture taken on March 20, 2024 shows a view of the Cairo University bridge across the Nile river connecting Cairo (R) with its twin city of Giza (L). (AFP)
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Egypt Raises Domestic Fuel Prices by up to 15% before IMF Review

This picture taken on March 20, 2024 shows a view of the Cairo University bridge across the Nile river connecting Cairo (R) with its twin city of Giza (L). (AFP)
This picture taken on March 20, 2024 shows a view of the Cairo University bridge across the Nile river connecting Cairo (R) with its twin city of Giza (L). (AFP)

Egypt raised the prices of a wide range of fuel products on Thursday, the official gazette said, four days before the International Monetary Fund (IMF) conducts a third review of its expanded $8 billion loan program for the country.

The official gazette, citing the petroleum ministry, said petrol prices increased by up to 15% per litre, with 80 octane rising to 12.25 Egyptian pounds ($0.25), 92 octane to 13.75 pounds and 95 octane to 15 pounds.

Diesel, one of the most commonly used fuels, saw the biggest increase, rising to 11.50 Egyptian pounds ($0.24) from 10 pounds, according to Reuters.

This is the second time the government has raised fuel prices since the IMF expanded its loan program by $5 billion in March. Egypt has committed to slashing fuel subsidies as part of the agreement.

But Egyptians who spoke to Reuters, including taxi driver Sayed Abdo, complained that Thursday's move would mean an automatic increase in prices for daily goods.

"If you ride with me today and usually pay 10 Egyptian pounds, I will ask you for 15, because fuel prices are raised. That's normal, because when I go get food, what I used to buy with 10 Egyptian pounds becomes now for 15," he said.

"We don't know where we're headed with these prices."

On Wednesday, Prime Minister Mostafa Madbouly said prices of petroleum products will gradually increase until the end of 2025, adding that the government could no longer bear the burden of increasing consumption.

Egyptians have also endured blackouts, which Madbouly said had ended at the start of this week, as the country struggled to import sufficient natural gas to tackle the summer heat.

In April, the IMF estimated that Egypt will spend 331 billion Egyptian pounds ($6.85 billion) on fuel subsidies in 2024/25 and 245 billion in 2025/26.

The IMF's approval for the third review of the expanded loan program was originally expected on July 10, but was pushed back to July 29, with the lender attributing the delay to the finalisation of some policy details.

The IMF is expected to disburse $820 million to Egypt after concluding its review.