Business activity expands in U.S, European recession could stall U.S. demand for U.S. exports

The December forecast for business activity expansion was more than forecast, which suggests American manufacturing is affecting the slowdown in Europe, Bloomberg reports.

The business barometer of The Institute of Supply Management-Chicago Inc., the Chicago Purchasing Managers Index, decreased from 62.6 to 62.5 in the month of November, which is promising as a rating above 50 indicates growth. Although, a median of 49 estimates in a survey indicate that the forecast would fall to 61, according to Nasdaq.

"Momentum in the U.S. economy remains solid, despite the deteriorating situation in Europe. The manufacturing sector remains solid, propelled by fairly solid gains in domestic sales. Exports of capital goods are also holding up," Brian Bethune, president of at Amherst, MA-based Alpha Economic Foresights, told before the results of the report were released.

However, if a recession occurs in Europe it is expected that slow growth and a frail market would decrease the demand for U.S. exports. Although reports show that consumer comfort decreased last week from a five-month high, existing home sales increased more than forecast in November as stocks climbed 0.5 percent this morning to The Standard & Poor's 500 Index, Bloomberg added.