Tuesday, February 20, 2024

Economic activity in the US expands in December

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U.S. business activity expanded in December, with orders and demand for labor rising, helping to further ease fears of a sharp slowdown in economic growth in the fourth quarter.

Standard and Poor’s Global said on Friday that a preliminary index of US composite PMI releases, which tracks the manufacturing and services sectors, rose to a five-month high of 51.0 this month, from 50.7 in November. A reading above 50 indicates expansion of the private sector. All the improvements came from the service sector, with manufacturing activities declining further.

The survey comes after upbeat news about the labor market in November. Thursday’s data showed the holiday shopping season is off to a strong start, with retail sales beating expectations for November.

The better-than-expected data prompted the Federal Reserve Bank of Atlanta to raise its estimate for GDP growth to 2.6% annually from a 1.2% pace. The economy accelerated at a rate of 5.2% in the third quarter.

Chris Williamson, chief business economist at Standard & Poor’s Global Market Intelligence, said, “Early PMI data suggested that the U.S. economy gained some momentum in December.

He added: “Easier financial conditions helped boost demand… and helped raise future production expectations.”

Economists do not expect a recession next year. The Federal Reserve kept interest rates steady on Wednesday and indicated in new economic forecasts that the historic tightening of monetary policy designed over the past two years has ended and that borrowing costs will remain low in 2024.

A S&P survey of new orders received by private firms rose to 51.1 this month from 50.6 in November. The private sector employment measure rose to 51.6 from 50.1.

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But the inflation rate rose as demand increased. A measure of prices paid by firms for inputs rose to 57.7 from 55.8 last month. However, compared to last year, companies have been less successful in delivering increased spending to consumers.

Industrialization continued to struggle; The survey’s preliminary manufacturing PMI fell to 48.2 this month, amid a decline in orders from 49.4 in November. The PMI for the express services sector rose to 51.3 from 50.8 last month. All subcomponents of new orders and hiring rose. (Reuters)

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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