Globally, the all-industry PMI took a step back from May's record high, with declines in both service and manufacturing output indices. At 56.6, the all-industry output PMI is consistent with 4% annualized growth in global GDP.

While the decline in the manufacturing PMI is consistent with ongoing bottleneck pressures in the goods sector, the pullback in services is more surprising given that this sector is expected to open up rapidly during the middle quarters of the year. The loss of momentum in the June all-industry production PMI is reflected in signs of some slowdown in demand.

Despite the misstep in June, the PMI level remains extremely high and still points to strong gains in activity. The same can be said for the new orders components. Looking ahead, the recovery is expected to accelerate in H2 2021 as pandemic headwinds fade and service sector activity normalizes, aided by a wake-up call across Europe that joins continued booming growth in the US.

Better days are still ahead... Future production indices for both manufacturing and services rose from already high levels and support the view that June's setback is a temporary pause rather than a sign of underlying momentum loss.

Growth where it is most needed... The decline in June PMIs is largely due to declines in the US (from record highs and still at a high level) and China. In contrast, all signs continue to point to a European boom. The PMI for all sectors in the eurozone added to its strong May gain and stood just below its all-time high. At the same time, the UK's all-industry PMI fell but remained extremely high above 60.

 ...and in the sectors where it is most needed. The recovery has been characterized by an disproportionate rebound in the goods sector, which has been more than offset by a still-depressed services sector, particularly for consumer-related services such as travel, entertainment, and restaurants. It is therefore encouraging that the decline in the global services PMI is largely due to a sharp drop in financial services. In contrast, the consumer services PMI, which rose in May, rose even further in June.