By The latest business surveys conducted by S&P indicate contrasting trends in the service and manufacturing sectors of the US economy. According to the Flash US Services PMI, there has been a positive growth, with a rise to a five-month high of 51.3 in November from 50.8 in the previous month. In contrast, the Flash US Manufacturing PMI fell to a four-month low of 48.2 from 49.4.
These numbers indicate that the service industry is growing, while manufacturing remains sluggish. A score above 50 signifies growth, while a score below 50 indicates contraction.
The ongoing divergence between these two sectors underscores the existence of a dual-track economy. Consumers continue to spend on services such as dining out, traveling, and entertainment. However, there has been a decline in the purchase of goods, especially expensive items, due to higher interest rates.
Manufacturers have experienced a decrease in demand as consumer spending patterns shift. Furthermore, the higher interest rates have not only dampened demand but have also acted as an impediment to investment.
This divide in the economy is expected to persist until there is a substantial decrease in interest rates, and the country is no longer at risk of a recession.
In response to these survey results, both the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) saw an increase in Friday trades.
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