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Dan Barnes and Jonathan Cable
NEW YORK/LONDON (Reuters) – The plunge in U.S. business activity eased slightly in January as the world’s two largest economies want to avoid. This year’s recession, a survey showed Wednesday.
S&P Global said the Flash US Composite PMI output index, which tracks the manufacturing and services sectors, rose to 46.6 this month from its last reading of 45.0 in December. Contraction and growth of the private sector.
The Fed’s fastest rate hike cycle since the early 1980s is weighing on demand in the world’s largest economy as central banks around the world try to keep high inflation in check.
But in a worrying sign, the survey’s input price measure for both US service firms and goods producers rose month-over-month for the first time since last May. This suggests that the US Central Bank should maintain pressure from rising interest rates. Return inflation to the target of 2%.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
The Fed is poised to raise rates by 25 basis points at next week’s policy meeting, but will look to a stopping point in the current rate hike cycle this spring to better balance the risks of lowering inflation without sending the economy into recession. doing.
Eurozone rebounds
The Eurozone has shown more resilience. Business activity showed a surprising rebound to moderate growth in January, adding signs that the bloc’s recession may not be as severe as feared and the currency union may escape recession. .
S&P Global’s Flash Composite PMI Index is considered a good indicator of overall economic health, rising to 50.2 this month from 49.3 in December.
January saw the index rise above the 50 mark for the first time since June, with readings better than expected.
“A rise in the Purchasing Managers’ Index is likely to ignite many hopes that the euro zone economy will finally escape recession,” said Commerzbank’s Christoph Weil. . But the apparent deterioration in the economic environment continues to point to at least a mild recession, Weil added.
A mild winter so far, falling gas prices and recent positive economic data prompted a Reuters poll released on Monday to revise up its quarterly growth forecasts, but a technological downturn remains. was predicted.
Pressure on Germany’s economy, Europe’s largest, eased further in January as inflation slowed and businesses entered the new year optimistically, a sister survey showed.
In France, the bloc’s second-largest economy, the PMI showed output again fell slightly overall in January, but manufacturing activity improved for the first time since August.
But UK private sector economic activity fell in January at its fastest pace in two years, another PMI showed.
The dollar fell near a nine-month low against the euro on Tuesday. The market continues its positive mood for the year on the back of PMI data and a number of corporate earnings. [MKTS/GLOB]
In the Eurozone, there was mixed news on inflationary pressures, according to the PMI survey. Although the input price index fell, companies raised their fees at a faster pace. The output price index also rose slightly, but was still well below the average of the last three years.
“The PMI suggests that price pressures remain strong, so the ECB is unlikely to take its foot off the brakes anytime soon,” said Andrew Kenningham of Capital Economics.
The European Central Bank is set to deliver 50 basis points of rate hikes at each of its next two meetings, according to a Reuters poll, with the fastest rate hike campaign on record so far keeping inflation close to its 2% target. could not bring
(Reporting by Jonathan Cable, David Milliken, Dan Burns; Writing by Lindsay Dunsmuir; Editing by Andrea Ricci)
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