Economy in Brief: November 2022

Both manufacturing and services PMIs trend lower after a hiccup of growth China's manufacturing and services PMIs are split in October. Manufacturing is improving and services eroding. The movements on the month are small. The composite weakens on the month.

The table below shows slightly different trends from manufacturing and services, but both series are flat from 12-months to 6-months to 3-months based on their averages. And the bottom line is that the queue ranking of the two series puts both in their 14th percentile - quite weak overall.

Manufacturing strengthens a little bit over six months before weakening over three months where the index falls below its 12-month average. For services, the 12-month average at 49.1 gives way to a six-month average of 50.7, strengthening over six months, as the manufacturing index did. But then the services index strengthens again to gain over three months with the three-month average ticking up to 50.9 from 50.7, demonstrating sector expansion. The composite index moves up from 48.9 over 12 months to 50.2 over six months then falls back to 49.9 over three months, signaling overall economic contraction.

At today's meeting of the Federal Open Market Committee (FOMC), the Fed announced a widely expected 75 basis point increase in the target for the Federal funds rate to a range of 3.75% - 4.00%. It was the fourth consecutive increase of that magnitude in the last six months and places the rate at the highest level since January 2008.

The statement accompanying today's action reads, "The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time."

The Fed went on to state, "In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

In addition, the Fed will continue reducing its portfolio of Treasury securities and agency debt and agency mortgage-backed securities.

Today's action was endorsed by all members of the FOMC.

The statement issued following today's meeting can be found here.