US business activity slows in April – PMI

The data released on Tuesday indicate a cooling of business activity in the US, reaching a four-month low due to weakened demand.
Despite this, there’s a slight easing in inflation rates, offering a potential relief as the Federal Reserve keeps a close eye on economic indicators to manage inflation.

The S&P flash Composite PMI, which monitors both manufacturing and services, dropped to 50.9 from 52.1 in March. Manufacturing specifically entered contraction territory with a slip in the flash manufacturing PMI to 49.9 from 51.9 in March.
New orders decreased slightly, employment growth slowed, and there were signs of spare capacity in supply chains. The flash services sector PMI also dipped to 50.9 in April from 51.7 the previous month.

This slowdown is seen across both manufacturing and services, indicating a loss of momentum compared to the previous quarter. Economists anticipate a modest increase in GDP, likely around 2.4% annualized rate for the last quarter.

Despite this slowdown, the US still performs better than other countries globally, even after significant interest rate hikes by the Federal Reserve since March 2022 aimed at curbing inflation.
However, recent stronger-than-expected inflation and employment readings have caused concerns at the Fed, leading to a reevaluation of their monetary policy stance.

The Fed is expected to keep its policy rate unchanged at the upcoming meeting, with recent data suggesting that monetary policy needs to remain restrictive for a longer duration. There’s been a shift away from signaling potential rate cuts, with a focus on the need for continued vigilance in managing inflationary pressures.