Investing.com - U.S. overall private sector activity slowed in July, according to survey data released on Tuesday.
The preliminary reading of the Markit services purchasing managers’ index came in at 56.2 this month, down from 56.5 in June.
Economists had forecast no change.
The manufacturing PMI unexpectedly rose to 55.5 in July, compared to 55.4 a month earlier.
Analysts had expected a reading of 55.1.
The composite output index, which measures the combined output of both the manufacturing and service sectors, fell to 55.9 this month from 56.2 in June.
The consensus forecast was looking for a drop to 56.0.
A reading above 50.0 on the index indicates industry expansion and below indicates contraction.
Despite the drop in the composite index, IHS Markit chief economist Chris Williamson still considers the above-50 reading to be a good start to the third quarter.
“Although down from June, the July flash PMI is in line with the average for the second quarter and indicative of the economy growing at an annualized rate of approximately 3%,” he explained.
But Williamson noted that trade frictions have become a major cause of concern, especially among manufacturers.
“Firms have become increasingly worried about the impact of tariff and trade wars on demand, prices and supply chains,” he remarked.
“July saw the steepest rise in prices charged for goods and services yet recorded by the surveys as firms passed rising costs on to customers, in turn frequently linked to tariffs,” he added.
Williamson also pointed to the fact that supply chain delays also hit a record high amid rising shortages of key inputs and commented that it is “usually a harbinger of further price rises.”