When central bankers around the world meet in Jackson Hole, Wyoming, later this week, they will be faced with fresh data suggesting the global economy is at risk of sliding into recession.
Surveys of Asian purchasing managers in Europe and the United States show a contraction in business activity, with little sign of a recovery anytime soon.
US private sector activity contracted for a second consecutive month in August and is at its weakest level in 18 months, with notable weakness in the services sector. S&P Global’s Flash Composite Purchasing Managers’ Index (PMI) for August fell to 45 this month – the lowest since May 2020 – from a final reading of 47.4 in July. Any reading below 50 suggests a contraction.
European business activity also fell for a second consecutive month, amid a sharp rise in energy prices. Eurozone flash PMI fell to 49.2 in August from 49.9 in July, hitting an 18-month low. Manufacturing and services companies reported a drop in new orders indicating future weakness.
S&P Global surveys indicated that private sector activity in Japan and Australia also fell in August for the first time since a wave of new COVID-19 infections earlier in the year.