According to IHS Markit’s business growth saw a significant uptick in October, the best its seen since February 2019.
The IHS Markit composite output index registered at 55.5, up from 54.3, the best number it has produced in almost 9 months. The index of service industry activity also gained from 54.6 to 56, and the purchasing manager’s index for the manufacturing sector rose from 53.2 to 53.3.
The index is a gauge of month-over-month changes in activity, not a summary of overall output. A reading of 50 indicates no change in business activity, while anything above 50 is a positive change and numbers below 50 indicate an economic contraction.
Chris Williamson, HIS Markit chief business economist said that last week’s report indicates that the US economy “started the fourth quarter on a strong footing.”
Markit is almost unique in showing a V-shaped economic bounce-back due to the trend being fueled by the rebound in output. Most of the other indices of business activity indicate that economic output still remains significantly under the pre-pandemic levels.
The price of oil lurched upwards on Tuesday despite the fear that the Chinese economic recovery may not be everything investors wished for. Driving the upward direction of oil is the hope of investors that the US Federal Reserve will implement new strategies which will help give the US economy a bit of a jump start.
The January delivery price for Benchmark crude was $85.80 per barrel, representing a 23 cent rise during late afternoon Bangkok time electronic trading on the New York Mercantile Exchange. The same contract had fallen only the day before by 37 cents on the Nymex, closing at $85.56.
Brent crude, which is used more to establish the price of international types of oil, was also up. On the ICE futures exchange in London the price was $107.66, an increase of 33 cents from the previous day’s closing price.
The Federal Reserve began a two day policy meeting on Tuesday. The results of the meeting are widely believed to be the purchase of more long-term Treasury bonds in an effort to replace the program which expires with the coming new year.
Analysts are predicting that 2012 should be a better year for the US in terms of the economy, even as Europe continues its economic shrinkage along with a great deal of the world.
The US has in recent days experienced a surge in confidence, less lay-offs, and improved holiday purchasing, leading economists to have an optimistic view towards the coming year. Maury Harris of UBS Securities and Dean Maki of Barclays Capital both see a growing divergence between the US and European markets, observing that the world’s largest economy is accelerating while the 17-member European market is heading into recession, while growth in emerging markets is slowing.
“There is a sense of decoupling,” said Harris, chief economist at UBS Securities in New York, whose team was the most accurate in forecasting the U.S. economy in the two years through September. “We can still have a decent year here in the U.S. even with the rest of the world slowing down.”
Fueling the improvement in the US economy is an improved job market and more easily accessed credit and confidence. These forces should help promote more spending among US households, while the debt crisis in Europe forces more “belt-tightening” there. The housing market is also stabilizing, adding strength to the overall economy, while people begin to consider new car purchases now that the economy is on the upswing, helping companies likes General Motors.
It seems Valentine’s Day still gets to the romantics, despite the current global economic situation. Figures just now released for the end of February for the sale of online jewelry were even higher than those from last February, getting a boost of 7.2 percent.
Americans Ignore Global Economy on February 14
Regardless of what is going on in the financial big wide world, Americans just love to love…or at least all the Valentine’s Day hype. It was expected that spending on the day reached around $15.7 billion. And it’s not just the traditional men buying women and vice versa….some individuals are spending decent amounts of cash on their pets. Well, after all, some do say that the four-legged friends who don’t speak back are the most companionable and loving.