The World Economics Headline Sales Managers’ Index (SMI) for NAFTA (Canada, U.S., and Mexico) produces the earliest monthly source of understanding about the speed and direction of business conditions in the world’s largest trading area.
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The SMI fell for the fifth month running in December to 52.5, from 53.3 in November. This signalled the lowest level in the survey history but nonetheless showed a modest overall improvement in economic activity.
By country, the latest data showed another slowdown in business activity in both Canada and the U.S. with the rates of expansion easing for the fourth and fifth straight months respectively. On the other hand, Mexico saw a continued increase in economic activity that was little-changed from that recorded on the previous survey period.
Despite slower growth, business expectations remained positive and strong during December, with the Business Confidence Index standing at 55.9, down from 56.2 on the prior month.
However, this marked the fifth consecutive month of declines and the lowest level on record. Notably, business sentiment eased in the U.S. and Canada whereas in Mexico, sentiment rose to a modest level over the month.
Moreover, the Market Growth Index, which reflects growth of the general marketplace in panellists’ own industry sectors, fell for the fifth straight month to reach the slowest pace registered by the survey.
The current reading nevertheless continued to point to solid levels of market expansion across NAFTA’s countries. Similarly, the Product Sales Index fell for the sixth month running in December but still signalled robust rates of sales growth
In particular, sales continued to rise in both Canada and Mexico while in the US, sales contracted for the first time since January 2014.
On the cost front, prices charged slowed further in December, with the Prices Charged Index slipping to 50.8 from 52.9 on the previous period. This was the lowest level since the panel began in February 2013, and suggested only a marginal rise in price inflation.
Prices charged eased sharply in the U.S. and Canada while in Mexico, prices declined for the fourth consecutive month.
Furthermore, employment levels weakened again in December although were broadly unchanged from the marginal rate seen in November.
The Staffing Index fell slightly to a fresh survey-low as sales and market growth continued to ease. Payroll numbers were reduced, particularly, in Canada and Mexico while in the U.S. employment levels continued to rise at a modest pace. ■