US economy weakens further in November – S&P Global survey

WASHINGTON, Nov 23 (Reuters) – US business activity contracted for the fifth straight month in November, with new orders falling to a 2-1/2-year low as higher interest rates slowed demand.

S&P Global said on Wednesday that its flash US composite PMI output index, which tracks manufacturing and services, fell to 46.3 this month, from 48.2 in October . A reading below 50 indicates a contraction in the private sector. Activity is collapsing under the weight of the Federal Reserve’s most aggressive rate-hiking cycle since the 1980s, aimed at containing inflation by dampening economic demand.

The composite flash index of new orders fell to 46.4 from a final reading of 49.2 in October, its lowest since May 2020. Outside of the first wave of the COVID-19 pandemic, it was the worst reading since 2009.

“Companies are reporting increasing headwinds from rising living costs, tightening financial conditions – particularly higher borrowing costs – and weaker demand in both domestic and export markets,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

But there were some glimmers of hope in the fight against inflation. The survey’s measure of prices firms pay for inputs slipped to 65.7 from a final reading of 67.0 in October, the lowest level since December 2020, reflecting an easing of supply constraints.

Companies also increased the prices of their products at the slowest pace in just over two years, partly due to slowing demand, with some firms reporting concessions and discounts to entice customers to order.

The moderation in price measures is consistent with this month’s data showing a sharp slowdown in consumer and producer inflation in October.

The survey’s flash manufacturing purchasing managers’ index fell to 47.6 this month from 50.4 in October, the lowest reading since May 2020. Economists polled by Reuters had forecast the index at 50.

Orders remained subdued, but pricing pressures eased further as manufacturers signaled the first improvement in supplier performance since October 2019. However, the shorter delivery times were often due to lower demand for upstream services.

Average input prices rose at the slowest pace in two years, but factories still faced the challenge of finding skilled workers. This suggests that the slowdown in inflation will be gradual as wages remain stubborn.

The survey’s flash services sector PMI slipped to 46.1 from 47.8 in October. The service companies also reported weak demand and moderate purchase prices.

Reporting by Lucia Mutikani; Edited by Chizu Nomiyama

Our standards: The Thomson Reuters Trust Principles.


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