US economy maintains growth momentum
The Purchasing Managers’ Index for industrial and service providers was steady in November. Meanwhile, the central bank is keeping the door open for interest rate changes.
In the manufacturing sector, value fell slightly below the growth threshold of 50 points.
Image: George Frey/Bloomberg
The US economy stabilized its growth rate in November. The purchasing managers’ index for industrial and service providers stagnated at 50.7 points from the previous month, financial services provider S&P Global reported Friday in its monthly company survey. Growth in the service sector has picked up slightly. However, in the manufacturing sector, the value fell slightly below the growth threshold of 50 points.
Experts expect the US Federal Reserve’s monetary policy to take effect later this year and the economy to cool. The central bank’s goal is to bring inflation back under control with higher interest rates. It recently kept the key monetary policy rate in a range of 5.25 to 5.50%, leaving the door open for a hike.
The central bank wants to take the whole economic picture into account and use the data to decide what to do next with key interest rates. The US economy doubled its growth in the summer quarter despite a sharp rise in interest rates. Gross domestic product (GDP) grew by 4.9% year-on-year from July to September. In the second estimate of GDP for the third quarter next Wednesday, experts estimate growth to be slightly higher at 5.0%. Many experts expect the rate to be below 2.0% in the final quarter. Given the growing economy, some monetary authorities have recently asked themselves whether monetary policy is adequate.
However, inflationary pressures in the US eased significantly in October, dispelling fears of an interest rate hike in financial markets. Futures markets expect no more interest rate hikes and cuts next year. Inflation eased to 3.2% in October from 3.7% in September.
Reuters
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