Morgan Stanley Fixed-US Economics Business Conditions Respondents Expect a 25bp...-110348505

M IdeaUS Economics | North AmericaBusiness Conditions: Respondents Expect a 25bp Cut in September Morgan Stanley & Co. LLCLenoy DujonUS/Canada Economist Lenoy.Dujon@morganstanley.com +1 212 761-2779 Sam D CoffinEconomist Sam.Coffin@morganstanley.com +1 212 761-4630 Diego AnzoateguiEconomist Diego.Anzoategui@morganstanley.com +1 212 761-8573 Sarah A WolfeEconomist Sarah.Wolfe@morganstanley.com +1 212 761-0857 The MSBCI remained in contraction. Manufacturing activity declined but services activity saw improvement. Respondents highlighted that labor market dynamics remain steady. In this month's special question, majority of respondents expect a 25bp cut at the September FOMC meeting. Exhibit 1:Morgan Stanley Business Conditions Index (MSBCI)Sep 23Oct 23Nov 23Dec 23Jan 24Feb 24Mar 24Apr 24May 24Jun 24Jul 24Aug 24Sep 24Morgan Stanley Business Conditions Index (seasonally adjusted)61494549534552423040534442MSBCI (3-month moving average)48475247494950464137414646Morgan Stanley Business Conditions Index 62355044555056403144543845Manufacturing Subindex75505050405050303350705025Services Subindex56315043675058452938443155 Prices Received Index88747281828586938578717986 Prices Paid Index77575043556773757081626582Composite MSBCI42465055494654524950575554Advance Bookings Index507550100602564505063887575Credit Conditions Index42264544557364636961576364Business Conditions Expectations Index50565050556569705461646761Hiring Index31384544362331333528322936Hiring Plans Index38354544363536372728433339Capex Plans Index42446550555458576261586450Memo: % reporting increase over previous 3 months Hiring061000017780007 Hiring Plans001000017700000 Capex Plans80301318151713312215278Note: Headline index seasonally adjusted, all else not seasonally adjusted.Source: Morgan Stanley ResearchNote: Zero values are an indication that companies on balance see the same level of activity as the prior month/s. Source: Morgan Stanley Research For important disclosures, refer to the Disclosure Section, located at the end of this report.September 16, 2024 11:41 PM GMTM Idea2What are company management teams saying? The MSBCI survey is a monthly canvas of our MS equity analysts gathering the current and expected conditions reported by companies under their coverage - a large sample of publicly traded companies. The resulting MSBCI headline index is a sentiment indicator that reflects our analysts’ responses to the following question: compared to a month ago, business conditions in my industry have: improved/worsened/not changed. We find that a reading in the MSBCI headline above 33.0 is consistent with positive real GDP growth, and for the MSBCI Composite index a reading above 46.0 is consistent with positive real GDP growth. We also introduce topical special questions each month. The September MSBCI survey (conducted from September 9-11) showed business conditions still in contraction. The index fell to a reading of 42 (seasonally adjusted, +5