The S&P sees the economy off to a good start in the fourth quarter, with inflation declining

The S&P sees the economy off to a good start in the fourth quarter, with inflation declining

Last updated: October 24, 2023 at 10:34 AM ET

First Published: October 24, 2023, 9:53am ET

THE NUMBERS: The U.S. economy showed improvement at the start of the fourth quarter due to slowing inflation and new hopes that interest rates have peaked, a pair of Standard & Poor’s surveys showed.

The Standard & Poor’s US services sector index rose to a three-month high of 50.9, from 50.1 the previous month. Most Americans work in the service side of the economy.

the…

Numbers: Two Standard & Poor’s surveys showed the US economy improving at the start of the fourth quarter due to slowing inflation and new hopes that interest rates will peak.
The Standard & Poor’s US services sector index rose to a three-month high of 50.9, from 50.1 the previous month. Most Americans work in the service side of the economy.

Meanwhile, the Standard & Poor’s US manufacturing sector index rose to a six-month high of 50, from 49.8 the previous month. The index has been in negative territory since last spring.

S&P Global surveys are among the first indicators to provide an assessment of the health of the economy each month. Any number above 50 indicates expansion, while numbers below 50 indicate contraction.
Surveys by Standard & Poor’s have consistently shown that the economy is weaker than other measures of growth in the United States, so the recent rise is a positive sign.
Recent reports on job creation, layoffs and retail sales indicate that the economy is still growing at a healthy pace.

Key details: Manufacturers reported stronger demand for their goods for the first time since April.
The cost of materials rose at the slowest pace in three years, indicating a further decline in inflation. The companies said they were willing to pass on the savings to customers in order to increase sales.
The majority of survey participants were more optimistic about the next 12 months. Many of them continued to hire new workers, but at a slower rate.

The Big Picture: The economy was supposed to slow due to higher interest rates orchestrated by the Federal Reserve to tame inflation. Instead, growth has accelerated since the spring.
Economists expect that higher borrowing costs will eventually put pressure on the economy. However, as long as unemployment remains low and businesses continue to hire workers, consumers are likely to continue spending – which should keep the United States out of recession.
I look forward: Chris Williamson, chief business economist at S&P Global Market Intelligence, said S&P surveys “have been among the most pessimistic economic indicators in recent months, so the improvement in U.S. production growth noted at the start of the fourth quarter is good news.” “.
“Sentiment has improved in part due to hopes that interest rates will peak, something that looks increasingly likely given further easing of inflationary pressures,” he said.
Dow Jones Industrial Average

DJIA

And Standard & Poor’s 500

SPX

It continued its gains in Tuesday’s trading.

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