All articles tagged with #economic activity
The December 2025 ISM Manufacturing PMI fell slightly to 47.9%, indicating continued contraction in the U.S. manufacturing sector for the 10th consecutive month, with mixed signals such as slower employment and inventories but some positive signs in new orders and export activity. Overall, the manufacturing economy remains weak, influenced by tariffs, geopolitical issues, and demand uncertainties.
The US manufacturing sector continued to contract in November, marking the eighth consecutive month of decline, according to the latest ISM Manufacturing Report. The Manufacturing PMI rose to 48.4 from 46.5 in October, indicating a slight improvement but still below the 50 threshold that signifies expansion. New orders and employment indices showed some growth, while the price index decreased. The report suggests ongoing weak demand as companies plan for 2025 post-election cycle.
U.S. stock markets rose on Friday, with all major indexes set for weekly gains, driven by strong economic activity data and optimism about potential lower interest rates and business-friendly policies from the incoming Trump administration. The small-cap Russell 2000 index outperformed, indicating a shift from technology to value stocks. Investors are also anticipating the Federal Reserve's December policy decision, with a 59.6% chance of a rate cut. Despite geopolitical tensions, markets remain calm, awaiting further clarity on Trump's economic policies.
The Services PMI® registered 53.4 percent in January, indicating the 13th consecutive month of expansion in the services sector, with increased business activity, new orders, and slower supplier deliveries. The Employment Index also showed growth after a month of contraction, while the Prices Index increased for the 80th consecutive month. Despite optimism about the economy, respondents expressed caution due to inflation, cost pressures, and geopolitical conflicts. Industries such as Health Care & Social Assistance, Agriculture, and Professional, Scientific & Technical Services reported growth, while others like Information and Retail Trade experienced a decrease.
The January 2024 Manufacturing ISM® Report On Business® indicates that the U.S. manufacturing sector contracted for the 15th consecutive month, with the Manufacturing PMI® at 49.1%. New orders and production are growing, while employment is contracting. Supplier deliveries are faster, raw materials inventories are contracting, and prices are increasing. The report reflects annual adjustments to seasonal factors used to calculate the indexes. Despite the contraction, the overall economy continued to expand for the 45th month, with some improvement in demand and stable production levels.
Recent economic indicators show evaporating inflation alongside strong economic activity, signaling a turnaround in the inflation fight and suggesting that inflation can be beaten without causing a painful downturn, a positive development for financial markets and policymakers.
The Federal Reserve has issued its FOMC statement, noting that economic activity has slowed from the strong pace seen in the third quarter. Job gains have moderated but remain strong, while inflation has eased over the past year but remains elevated. The Committee decided to maintain the target range for the federal funds rate and will continue to assess additional information and its implications for monetary policy. The Committee is committed to returning inflation to its 2 percent objective and will adjust the stance of monetary policy if risks emerge that could impede the attainment of its goals.
Wall Street is optimistic about a soft landing for the economy, leading to increased demand for stocks. The recent rally in markets, fueled by a softer-than-expected consumer inflation report, has boosted confidence that rising bond yields will not hinder economic growth or trigger a recession. Analysts and portfolio managers anticipate further gains in the stock market as the year progresses.
The Federal Reserve has issued its FOMC statement, indicating that economic activity expanded strongly in the third quarter, although job gains have moderated. Inflation remains elevated, and tighter financial conditions are expected to impact economic activity, hiring, and inflation. The Committee will maintain the target range for the federal funds rate and continue to assess additional information for monetary policy decisions. The Committee is committed to returning inflation to its 2 percent objective and will adjust the stance of monetary policy if necessary.
Goldman Sachs CEO David Solomon warns that the U.S. economy may experience a slowdown in economic activity and that the Federal Reserve may continue its rate hike campaign. Solomon believes that inflation, particularly in labor, will have an impact and expects the Fed to act accordingly if inflation picks up. While the Fed decided to pause rate hikes last month, the market is now feeling the impact. Mortgage rates are rising, causing a slowdown in home sales as potential buyers balk at the cost. Solomon does not anticipate interest rates reaching the levels of the 1970s or 80s but acknowledges that the sudden change after a period of accommodative monetary policy can be a shock to the system. He expresses confidence in the resilience of the U.S. economy but cautions that it may be more fragile heading into 2024 due to global and geopolitical uncertainties.
Economic activity in the Federal Reserve Districts remained stable or showed slight declines. Consumer spending was mixed, with differences in prices and product offerings. Labor markets continued to improve, with slight increases in overall employment and easing labor market tightness. Prices increased at a modest pace, with input cost increases slowing for manufacturers but rising for service sector firms. Retail sales grew modestly, while tourism activity varied across Districts. Overall, the outlook for economic growth was subdued, with expectations of slight growth in the coming months.
The US services sector is showing signs of contraction as demand slows, with the S&P Global Flash US Services Business Activity Index reaching an eight-month low of 50.2 in September. The composite PMI also dropped to a seven-month low of 50.1, driven by declines in the services sector. Companies cited high interest rates, inflationary pressures, and increased operating expenses as factors weighing on client demand. However, the labor market remains resilient, with job creation at its fastest level since May and businesses finding it easier to fill job openings.
Home equity could potentially fuel the next wave of consumer spending as the total value of the U.S. single-family market surpassed $40 trillion last year. While memories of the housing bubble and excessive debt loads still linger, the current situation is different, with home values having more than doubled since 2012 while mortgage debt has increased by less than a third. Homeowners' equity now stands at 69.6%, the highest since the late 1980s. Although caution is advised, the uptick in home equity borrowing, driven in part by attractive interest rates on home equity loans compared to credit cards, suggests that consumer finances remain robust and spending may continue to boom.
Goldman Sachs has lowered the probability of a U.S. recession in the next 12 months from 25% to 20% due to positive economic data. The investment bank's chief economist cited resilient economic activity, strong consumer sentiment, and falling unemployment levels as reasons for optimism. While the bank expects some deceleration in subsequent quarters, they believe the U.S. economy will continue to grow, albeit at a below-trend pace. Goldman still anticipates a 25 basis point interest rate hike from the Federal Reserve, but it could mark the end of the current cycle.
The Federal Reserve has issued a statement following its latest FOMC meeting, stating that economic activity has continued to expand at a modest pace, job gains have been robust, and inflation remains elevated. The Committee has decided to maintain the target range for the federal funds rate at 5 to 5-1/4 percent, while continuing to monitor incoming information for the economic outlook and being prepared to adjust the stance of monetary policy as appropriate. The Committee remains highly attentive to inflation risks and is strongly committed to returning inflation to its 2 percent objective.