La Jornada – Business activity in the United States declined in April

La Jornada – Business activity in the United States declined in April

US business activity slowed to a four-month low in April due to weak demand, while inflation rates eased slightly even as input prices rose sharply, signaling the potential for a future recovery.

The numbers come as the Federal Reserve (Fed, the central bank) looks for signs that the economy is weakening enough to reduce inflation further.

The US Composite Manufacturing PMI, which analyzes the manufacturing and services sectors, fell from 52.1 in March to 50.9 in April, Standard & Poor's Global reported on Tuesday. A reading above 50 indicates expansion in the private sector.

Manufacturing and services continue without recovery

The manufacturing sector entered contraction territory, with the survey's preliminary manufacturing PMI falling to 49.9 from 51.9 in March.

New orders contracted slightly, while employment growth slowed, albeit moderately, and supply chains showed signs of excess capacity.

Meanwhile, the services sector PMI fell to 50.9 in April, compared to 51.7 in the previous month.

The slowdown reflects weaker growth rates in both the manufacturing and services sectors, with activity falling to its lowest levels in three and five months, respectively. That in turn meant that employment, which the Federal Reserve is closely monitoring for signs of decline, fell for the first time since June 2020, with the decline concentrated in services.

The survey indicates that the economy lost momentum early in the second quarter compared to the January-March quarter. According to a Reuters poll of economists, GDP is likely to rise at an annual rate of 2.4 percent in the fourth quarter.

The United States continues to outperform its global peers, despite the Federal Reserve raising interest rates by 5.25 points since March 2022 to control inflation.

The Federal Reserve has recently been spooked by a series of stronger-than-expected inflation and employment readings, suggesting that its battle to return inflation to its 2 percent target rate has stalled or even returned to maximum.

The Federal Reserve meeting to announce the interest rate decision is approaching

The Federal Reserve meets next week and is expected to keep the official interest rate at the current range of 5.25-5.50 percent.

Last week, a number of US central bank policymakers refrained from announcing at least one rate cut this year, saying only that recent data suggested that monetary policy needed to be tight for longer.

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