The US economy is undergoing a slow start to the year, according to a survey of businesses released today.
The sales managers’ index (SMI) compiled by World Economics dropped to a score of 51.1 in January from 51.3 in the previous month. Scores above 50 indicate the economy expanded on the month.
Firms also said employment growth had slowed to a 38-month low and that prices declined on compared with December. World Economics said the economy could stagnate in the first three months of the year if the trend did not change. Its separate SMI sales index, which is closely correlated with GDP, fell to 48.1.
World Economics chief executive Ed Jones said:
The January SMI Index for the US economy indicates a continuation of the slowdown in the rate of economic growth which began in the second half of 2015. SMI data estimates that GDP growth could be around 0.7 per cent in Q4 [October to December], with January data suggesting that economic conditions are likely to be challenging at the start of 2016.
Official figures show the US economy grew at an annual pace of 3.9 per cent in the second quarter of the 2015 before slowing to two per cent in the third quarter.
The Atlanta branch of the US central bank, the Federal Reserve, last week said its so-called nowcasting indicator was predicting economic growth had slowed to an annual pace of 0.6 per cent growth over the final three months of 2015.