(Bloomberg) --
The seasonally adjusted preliminary IHS MarkitU.S. Composite Purchasing Managers' Index fell to 55.9 in July,as services fell to a three month low of 56.2 and manufacturingrose to a two-month high 55.5.
Higher input costs were passed on to clients at the fastest pacesince the combined manufacturing and services index was startedin October 2009. Survey respondents cited higher fuel and rawmaterial prices widely from the tariffs on steel and aluminum asthe reason behind the increase in costs in July, according tothe release.
“Trade frictions have clearly become a major cause of concern,especially among manufacturers. Firms have become increasinglyworried about the impact of tariff and trade wars on demand,prices and supply chains,” said Chris Williamson, Chief BusinessEconomist at IHS Markit.
The manufacturing component was little changed from June as bothproduction volumes and employment numbers held firm. New Ordersare down 3.4 points from April and exports orders were negativefor the second month in a row. More than two years have passedsince the last time export orders were negative for consecutivemonths.
Survey respondents widely commented on low stocks amongsuppliers and capacity constraints across the freight industryas the cause behind ongoing supply chain turmoil, which hasdropped suppliers' delivery times index to the lowest level in11 years of data collection. Supply chain delays are “usually aharbinger of further price rises,” said Williamson.
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