Is the US economy headed for another choppy quarter?
US private-sector growth hit the brakes in April with preliminary data pointing to the weakest rate of expansion in seven months, defying Wall Street’s expectations for modest growth over last month.
A preliminary read of the purchasing managers’ index for the manufacturing sector, produced by IHS Markit, hit 52.8, below March’s 53.3 reading and under the 53.8 expected by analysts surveyed by Bloomberg. The drop-off comes despite a rise in export orders, according to the report.
The services sector PMI also slipped to 52.5 versus 52.8 last month, and below the expected 53.2.
Both figures represent a seven-month low, despite staying on the positive side of the 50 mark that separates expansion from contraction, according to the survey’s authors.
The April data also pointed to the weakest rise in private-sector payrolls since February 2010, driven primarily by soft hiring in the services sector. Nevertheless, the Markit report said that services providers “remain upbeat” about their growth prospects in the year ahead, with positive sentiment at its strongest in three months.
Chris Williamson, chief business economist at IHS Markit, said:
“The PMI data suggest the US economy lost further momentum at the start of the second quarter. The surveys are signalling a GDP growth rate of 1.1 per cent after 1.7 per cent in the first quarter….The survey responses indicate that some froth has come off the economy since the post-election bounce seen at the end of last year. However, with inflows of new business picking up slightly in April and business optimism about the year ahead also brightening, there’s good reason to believe that growth could revive again in coming months.”