O'Neal Steel Market Informer

U.S. Business Activity Contracts For A Fifth-Straight Month

The S&P Global flash November composite purchasing managers’ index slid about 2 points to 46.3, the second-lowest level since the immediate aftermath of the pandemic, the group reported November 23. Readings below 50 indicate shrinking activity and the latest print was among the worst in data back to 2009.

The group’s composite measure of new orders shrank the most since May 2020 as manufacturers and service providers pointed to a pullback in demand related to rising interest rates, economic uncertainty, and the lingering effects of still-elevated inflation.

“Companies are reporting increasing headwinds from the rising cost of living, tightening financial conditions—notably higher borrowing costs—and weakened demand across both home and export markets,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.

Activity at service providers contracted at the second-fastest pace in more than two years, the report showed, as a gauge of new business shrank for the third time in four months.

S&P Global Index Chart

The manufacturing PMI sank nearly 3 points to 47.6 this month. And when excluding the early months of the pandemic, the production and orders measures both retreated at the steepest rates since 2009.

On a more comforting note, the composite measure of input prices eased for a sixth-straight month, though it remains historically elevated. The prices-received gauge fell for a seventh month. Output expectations over the next year picked up, the report showed, in part reflecting more stability in supply chains. The index, however, remains softer than it was a year ago.

“November even saw increasing numbers of suppliers, factories and service providers offering discounts to help boost flagging sales,” Williamson said.

“In this environment, inflationary pressures should continue to cool in the months ahead, potentially markedly, but the economy meanwhile continues to head deeper into a likely recession,” he said.

Source: Bloomberg, 11.23.2022

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