The business environment in the United States might be falling apart. According to the Morgan Stanley Business Conditions Index (MSBCI) fell 32 points last month. This marks the most dramatic collapse since the metric was first introduced. Accordingly, the gauge has touched on its lowest point since the 2007-2008 financial crisis. In addition to this, a different composite of business condition measurements has also sunk by its biggest loss since 2008; it is now at its lowest level since February of 2016.
Morgan Stanley says this report comes as June stocks have buoyed upward, even during a more turbulent trading season. The Nasdaq Composite Index, which is still down less than one percent on the day, did enter correction territory on June 3, but has gained 6.3 percent since then, as of Friday morning.
Of course, the tense trade relationship between the United States and China (and a handful of other major international economies) continues to obstruct confidence among global business leaders. And this has led to unresolved tariff conflicts that have informed more difficulty in developing new business strategies, which has forced many companies to change their supply chains.
In addition, the major bank accounts that the measurement of the index reflects there has been quite a slowdown in domestic job growth. Economists for the report have also said that the decline in business conditions remains “consistent with the slowdown in gross hirings reflected in the latest employment report for May” and raises the risk for more persistent weakness in labor demand moving into the next month’s report.
Specifically, the United States labor market only produced 75,000 new jobs in May. That is far less than half of what many analyst had forecast for the month (around 185,000). Accordingly, this has the potential to mark a significant change in momentum of what has been a major foundation for the domestic economy.
In all, the market looks like it is closing the week on a down note. The Dow Jones Industrial Average is down 0.07 percent, on the day. The Standard & Poors 500 Index is down more than double that, at -0.016. Finally, the Nasdaq Composite Index is down more than half a point.