U.S. manufacturing entered contraction territory, with the survey’s flash manufacturing PMI slipping to 49.9 this month from 51.9 in March.
MIDF Research, in its Economic Brief today (Apr 24), said new orders shrank slightly while growth in employment slowed, albeit modestly, and supply chains showed signs of spare capacity. The survey’s flash services sector PMI dipped to 50.9 in April from 51.7 in the prior month. (Reuters)
MIDF Research is of the view that the US S&P Global Services PMI fell to 50.9 in Apr-24, indicating the softest expansion in 5 months and missing market expectations of 52.0.
Concurrently, the manufacturing PMI registered the first contraction in 4 months, falling to 49.9 (Mar-24: 51.9) and well under market projections of 52.0.
Both sectors registered a decline in new orders with service providers citing challenges from high interest rates and rising prices while manufacturers linked the fall to inflation, weak demand and sufficient stock at customers.
Additionally, employment was tapered for the 1st time in almost 4 years with the bulk of the reduction coming from the services sector.
On prices, the services sector marked the second slowest pace of cost increase in 3.5 years while in contrast, the manufacturing sector saw input inflation soared to a 1-year high.
Meanwhile, output inflation moderated for both sectors. As demand conditions softened, overall business sentiment tumbled to a 5-month low but remained positive on hopes that market conditions will improve.
Moving forward, the slower expansion of the services sector signalled signs of softening of domestic demand conditions while the contraction of the manufacturing sector activities indicates possible deterioration in external demand.
Nevertheless, continued expansion in the services sector activities still point to growing domestic spending in the US, although the pace of growth was slower than previous month.
MIDF Research continues to expect the Fed to ease its monetary policy setting this year although the timing will likely be in the latter part of 2CHY24 given the resilience in the US economy and job market vis-à-vis concerns over sticky and elevated inflation.
