Quotes from the news wire:
Worries about the Delta variant have become more widespread, ... subduing activity in some instances and raising concerns about the possibility of virus restrictions being tightened again, hence services growth in July was slightly less marked than the earlier flash estimate and future expectations cooled, presenting a significant downside risk to the outlook and hinting that growth could begin to slow again as we head toward the autumn.
A mixed report on the health of the U.S. labour market gives frustratingly little new insight into whether the Fed will start to hike rates, a bumper payrolls number would have sealed the case for higher interest rates in many people minds, while a low number would have dealt a blow to any chances of tightening of policy at the next meeting. Instead, we had something in the middle.
While the survey data point to the economy rebounding in the second quarter, the weak PMI number for June raises the possibility that we are seeing a loss of momentum heading into the third quarter, the slowdown is being led by deteriorating export performance, which many producers in turn linked to a loss of competitiveness caused by the stronger dollar.
Companies are citing greater uncertainty about the outlook, especially in export markets, leading to some scaling back of expansion plans and a greater reluctance for customers to place orders compared to earlier in the year, which suggests a slowdown could become more entrenched unless demand revives.
Although still reasonably strong, the pace of growth has slowed for three successive months, taking it down to the slowest since January, when business was hit by extreme weather arising from the Polar Vortex. This time, there was little anecdotal evidence from companies of the weather affecting business.
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