Although private sector employment fell in November for the very first time in practically three and a half years, U.S. company activity remained stable, which was expected given the forecast for a fourth-quarter economic slowdown.
The services and manufacturing industries are tracked by S&P Global’s flash U.S. Composites PMI Productivity Index, which remained stable at 50.7 this month due to a slight increase in services-related activity offsetting a decline in manufacturing, the company said on Friday. An increase in the economy as a whole is indicated by a rating above 50.
The flash manufacturing PMI for the survey fell from 50.0 in October to 49.4 this month. This month, the flash service industry PMI increased marginally from 50.6 to 50.8.
This quarter, economists anticipate a significant slowdown in overall economic activity as the consequences of the Federal Reserve’s rising interest rates begin to take hold. The US Federal Reserve has increased the policy rate by 525 base points to reach the current range of 5.25%–5.50% since March 2022.
In the third quarter, the economy expanded at an annualized rate of 4.9%. The majority of growth projections for the October–December quarter are below a 2% rate.
In November, the flash composites new orders index rose to 50.4, reversing three months of downward trend.
Businesses cut staff as a result of the weak order growth; the employment index in the poll fell to 49.7. This was the first decline since June 2020, and it came after an October reading of 51.3.
According to S&P Global, companies frequently cited low demand and increased cost pressures as the causes of layoffs in the manufacturing and service industries. Employers were also putting hiring bans into effect.
According to Sian Jones, lead economist at S and P Global Market Intelligence, “job shedding has spread outside the manufacturing sector as services firms indicated a continuing drop in staff in Nov as cost savings were sought.”
