US business activity picks up in December- S&P Global survey
2023.12.15 10:13
© Reuters. FILE PHOTO: Workers assemble a Ford truck at the new Louisville Ford truck plant in Louisville, Kentucky, U.S. September 30, 2016. REUTERS/Bryan Woolston/File Photo
WASHINGTON(Reuters) – U.S. business activity picked up in December amid rising orders and demand for workers, which could further help to allay fears of a sharp slowdown in economic growth in the fourth quarter.
S&P Global said on Friday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to a five-month high of 51.0 this month from 50.7 in November. A reading above 50 indicates expansion in the private sector.
All the improvement came from the services sector, with manufacturing activity declining further.
The survey followed upbeat news on the labor market in November. The holiday shopping season also got off to a strong start, with retail sales outperforming expectations in November, data showed on Thursday.
The run of better-than-expected data prompted the Atlanta Federal Reserve to boost its gross domestic product growth estimate to a 2.6% annualized rate from a 1.2% pace. The economy accelerated at a 5.2% rate in the third quarter.
“The early PMI data indicate that the U.S. economy picked up a little momentum in December,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. “Looser financial conditions have helped boost demand … and have also helped lift future output expectations higher.”
Economists do not expect a recession next year. The Federal Reserve held interest rates steady on Wednesday and signaled in new economic projections that the historic tightening of monetary policy engineered over the last two years is at an end and lower borrowing costs are coming in 2024.
The S&P Global survey’s measure of new orders received by private businesses increased to 51.1 this month from 50.6 in November. Its gauge of private sector employment climbed to 51.6 from 50.1.
But with demand perking up, inflation crept higher. A measure of prices paid by businesses for inputs increased to 57.7 from 55.8 last month. Relative to last year, businesses are, however, not having great success passing on the increased costs to consumers.
Manufacturing continued to struggle, with the survey’s flash manufacturing PMI falling to 48.2 this month amid declining orders from 49.4 in November. Its flash services sector PMI rose to 51.3 from 50.8 last month. The new orders, employment and input prices sub-components all rose.
