US Global PMI Reveals Economic Slowdown in April 2024
- PMI drops to 50.9, signaling slower growth in the manufacturing and services sectors.
- Declining new orders and cautious hiring suggest businesses are wary of the economic outlook.
US Economy Shows Modest Growth, PMI Dips to 50.9 in April
On April 23, 2024, the latest US Global Purchasing Managers' Index (PMI) was released, revealing a nuanced picture of the American economy. The PMI is a critical economic indicator that measures the health of the manufacturing and services sectors, with a reading above 50 indicating expansion and below 50 signaling contraction.
The S&P Global Flash US Composite PMI for April came in at 50.9, the lowest reading in four months, indicating a modest expansion in the private sector economic activity. This was down from March's reading of 52.1 and below economists' expectations of 52. This decline suggests a "little bit of a wobble" in the US economy as it enters the second quarter.
New Orders Decline, PMI dips to 49.9 in Manufacturing
April's report was particularly concerning as it showed a decline in new orders for the first time in six months, and companies scaled back on employment for the first time in nearly four years. This slowdown in new business inflows and the cautious approach to hiring reflect heightened concerns about the economic outlook and suggest that the robust activity seen in the first quarter may be losing momentum.
The manufacturing sector specifically showed signs of contraction with the S&P Global Manufacturing PMI dropping to 49.9 from 51.9, indicating a slight reduction in business activity. The services sector, while still expanding, also edged lower to 50.9 from 51.7.
US Bond Yields Drop as Calls for Interest Rate Cuts Rise
Financial markets reacted to the PMI data, with US bond yields dropping and revived calls for a Federal Reserve interest rate cut. The consensus has shifted, now expecting closer to two interest rate cuts in 2024, as the higher-for-longer interest rates seem to be cooling the economy.
Despite the slowdown, the US economy is still expected to have grown at a 2.5% annualized rate in the first quarter, according to Bloomberg data. Policymakers, including central banks, will be closely considering this PMI data when formulating economic policies.
The April 2024 US Global PMI indicates that while the US economy continues to expand, the pace of growth has slowed, and there are signs of caution among businesses. This data will be crucial for investors and policymakers as they navigate the economic outlook in the coming months.