A US business activity slowed to a nine-month low in January amid the increase in price pressuresbut companies reported having increased hiring, supporting the Federal Reserve’s cautious approach to cutting interest rates this year.
S&P Global reported this Friday (24) that its US Composite Purchasing Managers’ Index (PMI), which tracks the industrial and services sectors, fell to 52.4 this month. This was the lowest level since April and fell from the 55.4 recorded in December. A reading above 50 indicates expansion in the private sector.
O services sector was responsible for the fall in the PMI, with the manufacturing sector expanding for the first time in seven months due to expectations of “looser regulations, lower taxes and greater protectionism” under the new administration of President Donald Trump.
A uncertainty about the economic impact of the government’s trade and immigration policies It was one of the factors that led the Fed to reduce its projection of interest rate cuts for this year to just two, compared to the four predicted in September, when it began its monetary easing cycle.
“Although output growth slowed slightly in January, sustained confidence suggests this slowdown may be short-lived,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The measure of the research new orders received by private companies fell to 54.3 in January from 55.2 in December.
Price increases accelerated, with an indicator of average prices paid by companies for inputs rising to 58.5 from 56.0 last month.
Companies passed the higher costs on to consumers. A measure of the prices companies charge for their goods and services rose to 53.8 from 52.1 in December.
The flash manufacturing PMI rose to 50.1, the highest level since June, compared with December’s 49.4 and expectation of 49.7.
The services PMI fell to 52.8 from 56.8 last month and economists’ expectations of a reading of 56.5.
