- The US private sector witnessed its first decline in almost three-and-a-half years.
- Data revealed British companies returning to growth in November.
- There was a slight increase in Japan’s core consumer price growth in October.
On Friday, currency futures rose on upbeat data while the dollar fell after US business activity data. However, currencies traded within a narrow range as US markets closed early following Thanksgiving.
In November, US business activity remained stable. However, the private sector witnessed its first decline in almost three-and-a-half years, aligning with predictions of a fourth-quarter economic slowdown.
S&P Global reported on Friday that its flash US Composite PMI Output Index, tracking manufacturing and services sectors, held steady at 50.7. A small rise in services sector activity offset a contraction in manufacturing. The flash manufacturing PMI dropped to 49.4 from October’s 50.0, while the flash services sector PMI increased to 50.8 from 50.6 in the previous month.
Economists anticipate a considerable decline in overall economic activity this quarter due to the delayed impact of higher interest rates from the Federal Reserve. The dollar index fell by 0.4%. For the week, the index was down 0.5%.
The pound rose by 0.57% to its highest level since early September after Thursday’s data revealed British companies returning to growth in November. The data raised hopes that Britain will avoid a recession.
UK business activity (Source: S&P Global)
A day following Finance Minister Jeremy Hunt’s budget update, the S&P Global UK Composite Purchasing Managers’ Index revealed a reading above the growth threshold of 50 for the first time since July. “November’s flash PMIs once again affirm our perspective that the UK economy is in a state of stagnation rather than outright contraction,” remarked Simon Harvey, Chief of FX Analysis at Monex Europe.
Meanwhile, the Japanese yen remained nearly flat against the dollar at 149.45, following news of a slight increase in Japan’s core consumer price growth in October. It raised expectations of the Bank of Japan (BOJ) reducing monetary stimulus.
The euro climbed 0.39% to $1.0946 after data confirmed Germany’s slight economic contraction in the third quarter, as indicated in late October. According to the Ifo Institute’s latest survey, German business morale improved for a third consecutive month in November. The business climate index was 87.3, slightly below the 87.5 forecast by analysts.
