Economic picture mixed for makers and service providers
Business activity among manufacturers and service providers accelerated for the second straight month in November amid hopes of more interest rate cuts and an end to the federal government shutdown, financial information company S&P Global reported Friday.
But business leaders also said in survey results that they’re concerned about a decline in factory orders and a growing stock of unsold inventory. Unless demand revives for their products, manufacturers are likely to slow their rate of expansion, S&P said. That could also lead to slower growth for service-oriented firms.
“Furthermore, although jobs continued to be created in November, the rate of hiring continues to be constrained by worries over costs, in turn linked to tariffs,” Chris Williamson, S&P Global's chief business economist, said in an online report. “Both input costs and selling prices rose at increased rates in November, which will be of concern to the inflation hawks.”
While companies reported that they are more optimistic, in part because they’re less worried about the federal government’s tariffs, that doesn’t mean the issue is no longer present. Input prices for manufacturers rose at the fastest rate in three years, with tariffs cited as the primary cause. These higher costs led to higher prices for consumers, although S&P said the impact was restrained by companies wanting to be competitive with their peers.
Latest consumer sentiment data shows ongoing economic worries
Although the end of the federal government shutdown lifted consumers’ spirits slightly, they remain unhappy with persistent high prices and weakening incomes, according to the University of Michigan’s final November consumer sentiment survey, released on Friday.
The university said the data is slightly improved from what it reported in preliminary monthly results two weeks ago. Instead of the 6% drop measured earlier in the month, sentiment dipped just under 5%. Perceptions of current personal finances dropped about 13%, but expectations for the near future rose just over 1%.
Sentiment worsened most among consumers with large stock holdings due to recent market losses, according to Joanne Hsu, who directs the university’s survey.
World Cup expected to boost US tourism
Fans coming from overseas to watch FIFA World Cup soccer matches in the U.S. next summer are expected to turn around international visitation after a decline this year, Tourism Economics reported last week.
The matches will take place in 11 cities in June and July, the first time the U.S. has hosted soccer’s biggest event since 1994. Tourism Economics, a division of Oxford Economics, said in its report that the event will attract 1.24 million international visitors. Travel from abroad is expected to rise 3.7% next year, with almost a third of the increase attributed to soccer fans. This year, international visitation is expected to fall by 6.3%.
The 11 U.S. cities hosting matches next summer include New York, Kansas City, Los Angeles, Atlanta, Dallas, Seattle, Houston, Miami, San Francisco, Philadelphia and Boston. An additional five cities in Mexico and Canada will also welcome players and fans.