U.S. economy cools a bit after rocketing higher in second quarter, IHS Markit PMI data show

“The provisional PMI data for July point to the pace of economic growth slowing for a second successive month, though importantly this cooling has followed an
unprecedented growth spurt in May,” said Chris Williamson, chief business Economist at IHS Markit.

“While the second quarter may therefore represent a peaking in the pace of economic growth according to the PMI, the third quarter is still looking encouragingly strong,” he added.

IHS Markit said its flash survey of U.S. manufacturers rose slightly to 63.1 in July from 62.1 in the prior month.

A similar survey of service-oriented companies — banks, restaurants, retailers and the like — dipped to a five-month low of 59.8 from 64.6 in June.

Inflation and short-term capacity issues remain major sources of uncertainty among businesses. Business optimism about the year ahead fell to the lowest level seen so far this year.

Workers were receiving higher pay, firms reported. This is important to economists because higher inflation can’t be sustained without higher wages.