New Data Shows US Economy Could Be Losing Steam
Recent data released on Tuesday has raised concerns about the strength of the US economy, with the latest figures indicating a potential slowdown in growth.
According to S&P Global’s flash US composite PMI, which measures activity in both the services and manufacturing sectors, April saw a reading of 50.9. This marks the lowest reading in four months, down from March’s 52.1 and falling below economists’ expectations of 52.
Chris Williamson, chief business economist at S&P Global Market Intelligence, explained that while a reading above 50 still indicates growth, the decline from previous months suggests a “little bit of a wobble” in economic activity as the second quarter begins.
“It’s going to be interesting to watch this and see how that persists,” Williamson said. “But certainly, the second quarter so far is not looking as strong as the first quarter, which I think is pretty much in line with what most people were anticipating. It was a good start to the year, [and now it’s] losing some momentum.”
Business confidence, which hit a 20-month high in January, has also taken a hit, reaching its lowest level since November. The report for April showed a decline in new orders for the first time in six months, along with companies scaling back on employment for the first time in nearly four years.
Williamson pointed out that the decrease in business expectations for the year ahead may have been influenced by changes in monetary policy expectations. In January, when confidence was high, markets were anticipating multiple interest rate cuts from the Federal Reserve. However, the outlook has since shifted, with expectations now leaning towards only a couple of cuts in 2024.
This shift has led to a rise in Treasury yields, with the 10-year Treasury yield up nearly 80 basis points since February. Williamson noted that this tightening of financial conditions could impact sentiment and lead to a slight pullback in demand.
As the situation continues to evolve, economists and market analysts will be closely monitoring the data to gauge the overall health of the US economy in the coming months.
