The sharp fall in the composite PMI to a 2-year low supports our view that the strong rebound in activity that started in Q2 will be more muted across the second half of the year. Today’s flash estimate showed that the manufacturing PMI fell from 49.7 to 49.0. At the same time, the services PMI also fell from 53.1 to 49.3, leaving it only slightly above its historical average of 49. As a result, the composite PMI fell from 52.0 to 49.4, the lowest it has been since August 2022. While the composite PMI has been a poor guide to GDP growth in recent quarters, on past form it’s consistent with GDP rising by around 0.3% y/y.
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