Preliminary
data published by S&P Global on Wednesday revealed that expansion in the U.S.
private sector business activity slowed in early April as growth of service sector business activity decelerated
sharply.
According to
the report, S&P Global flash U.S. Composite Purchasing Manager's Index
(PMI) Output Index came in at 51.2 early this month, down from 53.5 in March. The latest reading signalled a deceleration of business activity
growth to a 16-month low from the three-month high recorded in March.
A reading above
50 signals an expansion in activity, while a reading below this level signals a
shrinkage.
S&P Global
flash services PMI checked in at 51.4 in April, sharply down from 54.4 in the
previous month. This pointed to the second-weakest growth in activity across
the services sector recorded over the past year. Economists
had expected the services PMI to drop to 52.5.
Meanwhile, S&P
Global flash manufacturing PMI increased to 50.7 in April from 50.2 in the
previous month. The latest print indicated that activity in the goods-producing
sector grew for the fourth straight month, albeit at a modest pace overall. Economists had anticipated the manufacturing PMI to slip to 49.1.
S&P Global noted that the April decrease in
the U.S. private sector business activity was attributable to a sharp slowdown
in service sector business activity in response to weaker order book growth
amid increased uncertainty surrounding the economy and tariffs. Meanwhile, new
orders placed at factories rose at a slightly higher rate, underpinned by higher
domestic orders. Employment rose slightly in April, as a modest increase in
payroll numbers in the service sector offset a reduction in manufacturing
jobs, the first one since October 2024. Business expectations about the year
ahead fell to one of the lowest levels seen since the COVID pandemic. On the
price front, average prices charged for goods and services rose in April at the
strongest rate for 13 months, increasing especially steeply in manufacturing, where
the rate of inflation hit a 29-month high.