The numbers: A pair of surveys of U.S. businesses added to mounting evidence on Wednesday that the economy is slowing in the wake of a record coronavirus outbreak.
IHS Markit said its “flash” survey of executives at service-oriented companies such as restaurants, financial firms and health-care providers fell to 55.3 this month from 58.4 in November.
Although any number over 50 signals expansion, it was the weakest reading in three months.
A similar survey of manufacturers dipped to 56.5 from 56.7.
What happened: Service companies whose businesses require lots of interaction with customers have been hit hard again by growing government restrictions on operating hours or the number of customers allowed into stores.
In November, for instance, sales at restaurants posted the biggest decline in seven months.
Other retailers, hotels and entertainment venues are among the other sectors at risk.
Manufacturers reported a much smaller slowdown. They have been more insulated from the damage from the coronavirus because they have greater control over their work environments and don’t deal directly with customers.
Manufacturers also let their inventories fall to very low levels during the first six months of the pandemic. They need to rebuild them in anticipation of an improving economy in 2021, analysts say, as vaccines become more widespread.
Big picture: There’s no doubt the coronavirus pandemic has taken another bite out of the U.S. economy in the fall, but the damage is not nearly as severe as it was last spring.
How bad it gets will depend on how quickly the latest outbreak is contained and how rapidly the vaccines are rolled out. The next month or two aren’t looking good.
What they are saying? “While vaccine developments mean some of the cloud caused by the pandemic should lift as we head through 2021, rising case numbers continue to darken the near-term outlook,” said Chris Williamson, chief business economist at IHS Markit.
“In particular, resurgent virus numbers were cited as a key factor behind a pull-back in hiring, hinting that the labor market has cooled amid growing caution among employers.”
Market reaction: The Dow Jones Industrial Average DJIA, -0.15% fell slightly but the S&P 500 SPX, +0.18% eked out a small increase, in recent trading.