WASHINGTON- US business activity held steady in November, but employment in the private sector declined for the first time in almost three-and-a-half years, consistent with expectations for an economic slowdown in the fourth quarter.
S&P Global said on Friday that its flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, was unchanged at 50.7 this month as a modest rise in services sector activity offset a contraction in manufacturing. A reading above 50 indicates expansion in the private sector.
The survey’s flash manufacturing PMI dropped to 49.4 this month from 50.0 in October. Its flash services sector PMI edged up to 50.8 from 50.6 in the prior month.
Economists expect overall economic activity to moderate considerably this quarter as the lagged effects of higher interest rates from the Federal Reserve start to have a greater impact. Since March 2022, the US central bank has raised its policy rate by 525 basis points to the current 5.25 percent -5.50 percent band.
The economy grew at a 4.9 percent annualized rate in the third quarter. Growth estimates for the October-December quarter are mostly below a 2 percent pace.
The flash composite new orders index increased to 50.4 in November, ending three straight monthly declines. The modest rise from a reading of 49.0 in October was mostly driven by the services sector, with factory orders stagnant.
The lack of strong order growth resulted in businesses shedding workers, with the survey’s employment index dropping to 49.7. That was the first contraction since June 2020 and followed a reading of 51.3 in October. -Reuters
