OPINION
Market Rating Before FOMC MeetingJan 31
Recession Risks in the US Aren't Off the Table Yet
According to the preliminary reading data from London-based global information provider IHS Markit and S&P Global for October, the composite purchasing managers index (PMI) in the US was 47.3 points, below market expectations of 49.3 points. In this period, the manufacturing PMI fell from 51.0 points to 49.9 points, while the services PMI fell to 46.6 points.
To examine the details of the report, the text, which emphasized that the composite PMI data was the second fastest rate of decline since 2009, excluding the first lockdown in the coronavirus pandemic, stated that the producers of goods and services faced weaker customer demand in this period.
In the article, it was stated that foreign demand decreased noticeably, while the strong dollar was seen as the reason for this. In addition, it was reflected that the difficult economic conditions in export markets increased its weight in new export orders.
In the report, which stated that producer inflation started to rise at the beginning of the fourth quarter after four months of soft price increases, it was informed that economic uncertainties and high wage scale were associated with this said rise.
In the report, it was stated that in parallel with weak customer demand, private sector firms did not greatly change employment by scaling their recruitment activities, but the personnel working in the service sector began to decline for the first time since June 2020.
In the article of Markit Economics, which pointed out that new orders started to decrease at the beginning of the fourth quarter, it was underlined that the optimism about the future outlook of the firms deteriorated significantly and the level of confidence that emerged was among the lowest levels in the history of the survey.
It was stated that companies continue to be concerned about the broader economic outlook, which has worsened due to price pressures and cost of living, as well as interest rate hikes and weak customer sentiment.
Finally, while the survey results indicated that the risk of an economic contraction increased in the fourth quarter, it was also determined that inflationary pressures remained persistently high.
The composite PMI data, which is closely watched as a preliminary indicator of gross domestic product (GDP), fell below the threshold of 50.0 points, indicating that economic activity in the nation is still slowing down.
Furthermore, domestic demand has weakened as a result of the US Federal Reserve's (FED) aggressive tightening policy, and a decline in new orders has been recorded at the start of the fourth quarter, reflecting the strong dollar. Indeed, high inflation rates have caused the service sector to contract to its lowest level in four months.
The fact that the production PMI data has shrunk for the first time since June 2020 is crucial in this situation. This indicates that the GDP decline in the US, which is already technically in a recession, could continue into the fourth quarter. On November 3, the final reading of the PMI data will be closely watched.
To examine the details of the report, the text, which emphasized that the composite PMI data was the second fastest rate of decline since 2009, excluding the first lockdown in the coronavirus pandemic, stated that the producers of goods and services faced weaker customer demand in this period.
In the article, it was stated that foreign demand decreased noticeably, while the strong dollar was seen as the reason for this. In addition, it was reflected that the difficult economic conditions in export markets increased its weight in new export orders.
In the report, which stated that producer inflation started to rise at the beginning of the fourth quarter after four months of soft price increases, it was informed that economic uncertainties and high wage scale were associated with this said rise.
In the report, it was stated that in parallel with weak customer demand, private sector firms did not greatly change employment by scaling their recruitment activities, but the personnel working in the service sector began to decline for the first time since June 2020.
In the article of Markit Economics, which pointed out that new orders started to decrease at the beginning of the fourth quarter, it was underlined that the optimism about the future outlook of the firms deteriorated significantly and the level of confidence that emerged was among the lowest levels in the history of the survey.
It was stated that companies continue to be concerned about the broader economic outlook, which has worsened due to price pressures and cost of living, as well as interest rate hikes and weak customer sentiment.
Finally, while the survey results indicated that the risk of an economic contraction increased in the fourth quarter, it was also determined that inflationary pressures remained persistently high.
The composite PMI data, which is closely watched as a preliminary indicator of gross domestic product (GDP), fell below the threshold of 50.0 points, indicating that economic activity in the nation is still slowing down.
Furthermore, domestic demand has weakened as a result of the US Federal Reserve's (FED) aggressive tightening policy, and a decline in new orders has been recorded at the start of the fourth quarter, reflecting the strong dollar. Indeed, high inflation rates have caused the service sector to contract to its lowest level in four months.
The fact that the production PMI data has shrunk for the first time since June 2020 is crucial in this situation. This indicates that the GDP decline in the US, which is already technically in a recession, could continue into the fourth quarter. On November 3, the final reading of the PMI data will be closely watched.
