Confidence among US firms improves further midway in 2024: S&P Global

Sentiment strengthened for the third consecutive outlook survey and was the highest since early-2022.

Moreover, US firms were among the most optimistic globally, with only the United Kingdom posting a higher degree of confidence of the 12 countries covered by the survey.

Sentiment strengthened across both the manufacturing (net balance 37 per cent) and services (+42 per cent) sectors, but the uplift in confidence was more pronounced in the latter.

An improvement in the wider US economy, plus the launch of new products and entry into new markets are among the opportunities facing firms.

Greater clarity following the presidential election was also mentioned, while some manufacturers predict that reshoring of supply chains will help support growth, S&P Global said in a release.

On the other hand, some threats do remain to the generally positive outlook. Chief among them was inflation, which was mentioned by 27 per cent of companies. Interest rates remaining higher for longer was also a concern, alongside competitive pressures and political uncertainty.

Inflation expectations remained relatively elevated in June. Little sign of any meaningful slowdown in input cost inflation meant that predictions around selling prices were almost unchanged in June.

Expectations of increases in output prices were also much higher in the United States than the global average. The respective net balances for manufacturing and services were similarly elevated in June, suggesting broad-based inflationary pressures, noted S&P Global.

US companies revised up their projections for investment spending midway through the year, with sentiment around both research and development  and capital expenditure improving. Employment expectations were stable.

Manufacturers were more confident of hiring additional staff than in February, while in services the picture was less optimistic.

Confidence in the outlook for business activity and broadly stable inflation trends meant that US companies were slightly more optimistic regarding profitability in June.

In fact, profits sentiment strengthened for the second outlook survey in a row, with the net balance of 22 per cent the highest since early2023.

Fibre2Fashion News Desk (DS)