It’s no surprise that S&P Global Market Intelligence has recently released new data. This indicates that the expansion of US private sector cooled significantly in December. Both of these signal growing manufacturing activity, though the Manufacturing PMI fell to 51.8, down from 52.2. On the other hand, the Services PMI dropped, coming in at 52.9 after falling from 54.1. These numbers are an indication that economic growth, while still in positive territory, is continuing to slow down significantly.
Chris Williamson, the Chief Business Economist at S&P Global Market Intelligence, confirmed a contraction in the PMIs. He pointed out that this data is still consistent with an annualized GDP expansion of around 2.5% for the fourth quarter. In a cautionary sign, he pointed out that growth has now decelerated for the second month in a row.
S&P Global arrives at a composite reading by combining new orders data across the manufacturing and services sectors. It’s most recent drop was to 53, retreating from 54.2. This composite index provides a snapshot of the economy’s overall health. As a whole, private industry continued to grow in December, though that growth was at a slightly slower rate than experienced in November.
Williamson elaborated on the implications of the recent survey data, stating, “the flash PMI data for December suggest that the recent economic growth spurt is losing momentum. Although the survey data point to annualized GDP expansion of about 2.5% over the fourth quarter, growth has now slowed for two months.”
Furthermore, he expressed concerns regarding business confidence. “Firms have lost some confidence in the outlook and have restricted their hiring in December in accordance with the more challenging business environment,” Williamson added.
US Dollar Index fell as well on these revelations. It is 0.3% lower on the day and as of this writing at 97.96. The PMI data tumble sent the US Dollar Index lower. Clearly, economic fundamentals matter if investors reasonably valued an undersea tech company then.