US Sales and Market Growth Indexes Stay Positive

But Confidence and Employment Indexes suggest problems in store

The First Data on Economic Activity Levels in the United States - Every Month
Updated: August 19, 2024

Signs of a setback in US economic growth have emerged in the first two months of the third Quarter. After a relatively buoyant series of index readings in the second quarter of 2024, July saw a significant trend reversal in Business Confidence, which has continued into August. The Sales and Market Growth Indexes continue to show overall growth in August, but the Confidence Index, reflecting views on what's in store for respondents over the quarter ahead, suggest a rapid fall in the outlook. The average of first quarter Confidence readings came in at 52.2. The equivalent second quarter figure was 51.8. And the average of July and August readings was a negative 49.8, below the 50 "no change" bar.

It may be that the negative impact of macro-economic and geopolitical factors is slowly working through into expectations, if not yet actual business activity. The Federal Reserve has been cautious in its response to economic conditions, and widespread expectations of cuts in interest rates have yet to materialise. But Sales Managers - the respondent base for this survey - are notorious for picking up the first warning signs of problems ahead. Delayed signatures on contracts, increasing hesitation in agreeing to significant expenditures, and a general slowing down sales activity levels can all contribute to sales managers falling confidence, for good if sometimes difficult to articulate reasons.

Source: World Economics
Note: Data Shown as a Diffusion Index. (50 = 'No Change', above 50 = Increasing growth, below 50 = Declining growth)

Until July many sectors of the American economy seemed to be largely untroubled by the anti-inflationary rises in interest rates, and the growing shadow of disturbing global political change. However, the evidence presented by the August Sales Managers Survey suggests that the Federal Reserve's policy of keeping interest rates high may at last be having a restraining impact on the "animal spirits" so important to continuing growth in economic activity levels.

Whilst many Price Indexes have registered significant falls in price inflation, the Sales Managers Price Index continues to register relatively high monthly readings, suggesting that the dragon of Price Inflation has not yet been entirely slain. But with confidence on the future course of economic activity falling so sharply, at least one cut in interest rates in the run up to the November US election appears increasingly likely.

Sales Managers Index Components

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About the Sales Managers Indexes

The Sales Managers' Indexes provide the earliest monthly data on the speed and direction of economic activity in key growth areas of the world.

The SMI’s (Sales Managers’ Indexes) are compiled and analysed by World Economics and are based on survey data collected from a panel of companies stratifying all Industry Classification Board (ICB) sectors which are weighted to reflect their contribution to national Gross Domestic Product.

Key advantages of the SMI's:

• The SMI's provide the first indication each month of the speed and direction of economic growth.
• The SMI's provide the most complete indication of growth, covering all private sector activity.
• The SMI's are based on a key occupational group - sales executives - uniquely able to sense accurate changes in business activity levels.
• The SMI survey base - salespeople - are used by virtually all businesses, including in frontier markets, unlike other occupational groups.
• The SMI's focus on the key countries contributing to over 60% of United States growth in recent years.