New statistics released Tuesday showed signs that the U.S. economy may be losing momentum.
S&P Global's preliminary US Composite PMI for April, which tracks activity in both the service and manufacturing sectors, was 50.9, the lowest level in four months. April's index fell from 52.1 in March and was also below economists' expectations of 52.
Chris Williamson, chief business economist at S&P Global Market Intelligence, told Yahoo Finance that a composite reading above 50 indicates the economy was still growing in April. Told. However, the decline from the previous month indicates that economic activity is “a little choppy” as the second quarter begins.
“It will be interesting to look at this and see how it continues,” Williamson said. “But certainly, the second quarter so far doesn't seem as strong as the first, which I think is pretty much in line with what most people expected. It's been a good start to the year. . [and now it’s] We've lost some momentum. ”
After hitting a 20-month high in January, overall business confidence has taken a hit and is at its lowest level since November. April report also New orders fell for the first time in six months as companies cut jobs for the first time in nearly four years.
Mr Williamson said the tick drop in business expectations over the coming year was likely influenced by a shift in the narrative around monetary policy. In January, when business confidence was strong, markets were pricing in six or seven interest rate cuts by the U.S. Federal Reserve this year. Since then, expectations have changed, with the consensus now expecting nearly two rate cuts in 2024, according to Bloomberg data.
This has led to a sharp rise in U.S. Treasury yields, with the 10-year Treasury yield (^TNX) up nearly 80 basis points since the beginning of February. Williamson said this could tighten financial conditions and weigh on sentiment.
“We're seeing a bit of a pullback in demand, sort of a recalibration of the demand environment in light of this new pricing environment,” Williamson said.
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