Sentiment expressed in public communications by the biggest American companies slumped in June to the lowest level in at least a year, driven by negative mentions of economic growth and international relations, according to a Goldman Sachs Group Inc. analysis.
ISM’s U.S. factory gauge posted the third-straight decline in June, falling to the weakest level since 2016 as new orders stalled. Federal Reserve regional factory surveys also weakened during the month. At the same time, recent manufacturing gauges for July have picked up. The Philadelphia Fed’s index soared by the most in a decade while New York’s also improved in July.
Despite the preponderance of sour assessments, Walker said the two July manufacturing surveys signal that sentiment may turn a corner, and growth fears are likely to abate given projections for a slight acceleration over the next year as financial conditions improve.
“While we also expect global growth to stabilize and some form of a trade agreement with China, it seems somewhat less likely that the international relations bucket will return to its previous level,” Walker wrote. “Analyst commentary signals a more persistent rise in broad trade war risk, which could continue to weigh on sentiment.”
Reporting by Jeff Kearns.