Us business activity slowed significantly in June as rapid inflation reduced demand for services and led to an across-the-board contraction in factory orders and production.

Data released on Thursday by financial data provider IHS Markit showed that the initial PMI of the US Markit manufacturing sector recorded a 24-month low of 52.4 in June and was well below expectations of 56 from 57 in May. The initial PMI of Markit service industry in the United States was 51.6 in June, a five-month low, which was also lower than the expected 53.5 and 53.4 in May, while the initial value of composite PMI was 51.2, a five-month low and 53.6 in May.

With a number of US macro data collapsing, it may be surprising that analysts expect only a slight decline in the initial value of US Markit manufacturing PMI in June, but today's data show that our surprise is correct. Although the manufacturing PMI is still above the 50 rise and fall line, it is expanding at the slowest pace since the beginning of the year.

Companies have also downgraded their forecasts for the economic outlook for the coming year amid high inflation, rising interest rates, slowing demand and lingering supply chain concerns.

Commenting on the PMI data, Chris Williamson, chief business economist at Standard & Poor's Global Market Intelligence, said:

Us economic growth slowed sharply in June, with deteriorating forward-looking indicators heralding a contraction in the third quarter. The survey data are in line with economic growth of less than 1 per cent at an annualised rate in June, with the commodity production sector already declining and the vast service sector slowing sharply. "

The return of consumers has led to a brief boom after the easing of epidemic prevention restrictions, but many service companies are now seeing it increasingly difficult for households to cope with the rising cost of living and a similar decline in orders from non-essential manufacturers. "

As a result, demand for goods and services fell significantly in June compared with previous months.

Corporate concerns about the outlook have greatly increased as a result of the rising cost of living and falling demand, as well as the increasingly aggressive path proposed by the Fed to raise interest rates, and the ensuing deterioration in overall financial conditions. Business confidence is now at a level that usually indicates a recession, increasing the risk of a recession. "

The corollary of falling demand is reduced price pressures, with inflation measures of corporate costs and sales prices falling sharply in June, suggesting that price pressures have peaked, although they are still high. "