Business activity in the U.S. is falling the same as price pressure

In December, U.S. inflation decreased significantly due to a drop in demand. A decline in the number of new orders to the lowest level in 2.5 years caused a fall in business activity.

According to S&P Global data, in November the composite business activity index reached 46.4, and in December it was 44.6. The index stays under 50 for the sixth month in a row.

According to a Reuters survey, economists expected the index to be at 47.

At the same time, product cost growth for private sector firms was reported to be lower and cost burdens were rising at the slowest pace since October 2020. This could be a sign of an extension of the recent slowdown in inflation for next year, which will be an easing for consumers.

In November, the manufacturing PMI was 47.7. In December, it fell to 46.2, its lowest level in 31 months. Economists' forecast on maintaining the index at 47.7 did not materialize. Manufacturers are reporting one of the sharpest decreases since the 2008 financial crisis.

In November, the business activity index in the service sector was 46.2. In December, it fell to 44.4. Weaker demand and lower prices for raw materials were also noted in the service sector companies.