Services Sector Drives US Business Growth; Europe Loses Momentum

Breaking trends in the rest of the world, the U.S.’ business activity is on the upswing so far in 2020. In other major countries, that hasn’t been the case, as their economies have been performing weaker, The Wall Street Journal reported.

Data company IHS Markit reported earlier this week that its composite purchasing managers index in the U.S. had hit “a 10-month high of 53.1 in January, up from 52.7” last month. If that number is above 50, it indicates a growth in business. If it’s below 50, that points to contraction.

The robust business growth is due to particular strength in the services sector, though the manufacturing numbers were not as strong, dipping from 52.4 last month to 51.7 in January. IHS Markit Economist Sian Jones said the numbers showed that the manufacturing sector was still struggling, with producers of goods seeing only average numbers of new orders and output.

In the rest of the world, Japan saw a rise in business activity, making up for a weak end to 2019. In Europe, things were still weak going into January, with the country’s exports finally just beginning to stabilize after a long series of declines, but the services sector still lost momentum.

Stephen Stanley, chief economist at Amherst Pierpont, said the U.S. was doing better than either Japan or Europe, and that it seemed it would stay that way. He added that the winding down of the trade war between the U.S. and China would bode well for both countries’ economies, as well as those connected to them by trade, such as Germany — though it’s unknown exactly how much those countries will benefit.

Surveys of businesses in and around Europe pointed to continued sluggishness and weakness, IHS reported. The measurement of both the services and manufacturing industries there hovered statically at around 50.9 percent. Germany was hit harder than some by the slowdown in overseas demand.

A survey of CFOs found confidence in the U.S. market, but less so in Europe and other countries, with the consensus being that an economic slowdown could happen in 2020.

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