The US economy is losing momentum, according to new business surveys
The US economy is set for an end-of-year slowdown, according to new survey data published today, with business confidence falling to its lowest level for two years.
World Economics’ sales managers' index (SMI) dropped to a score of 54.3 in November – its fourth consecutive monthly fall. Any score above 50 signifies growth, with higher scores marking faster growth.
The SMI suggests that US growth peaked around the middle of the year. Both the manufacturing and service sectors – which makes up the vast majority of the US economy – registered a cooling off in growth.
World Economics’ US business confidence index dropped one point to 58.4. While it still indicates that the surveyed firms are optimistic about future business conditions, the index has fallen for four months and is at its lowest level for almost two years.
World Economics chief executive Ed Jones said:
The November SMI Index for the US economy indicates a sharp slowdown in the growth of the US economy in Q4 [October to December] to around one per cent [annualised]. Business Confidence is now at a two year low which is sure to sound a note of caution to policy makers as we look towards the tail end of 2015.
Any sign of a slowdown in the US economy toward the end of the year may tempt central bankers there to delay their first rate hike from record lows into 2016. Federal Reserve officials have sent mixed signals as to whether they will hike at their December meeting.
A further worrying piece of data out of the US today was the Empire State manufacturing index – a survey of manufacturers in New York state. The headline score was minus 10.7 for November, signalling a sharp deterioration in business conditions for a fourth consecutive month.
US manufacturers have struggled this year due to a host of issues such as a strong dollar making their goods more expensive in foreign markets and a fall in oil prices, which has caused producers to slash investment.