US April S&P Global services index 51.3 vs 50.3 expected
- Prior was 49.8
- Manufacturing 54.0 vs 52.5 expected - -highest since May 2022
- Prior manufacturing 52.4
- Composite 52.0 vs 50.5 expected
- Composite prior was 51.4
- Employment basically flat for a second month
- Input cost inflation at an 11-month high
- Output prices rising at the fastest pace since July 2022
This is a two-month high in services and a nice surprise but the real headline number is on manufacturing, which is the best in almost four years. The US manufacturing sector has largely been in something of a recession for all of that time and this is a good signal that it's turning the corner, despite higher energy prices. However there is some fine print: a big chunk of that new orders surge is companies panic-buying ahead of war-related shortages and price hikes.
Unfortunately, the services side — which is what actually drives the US economy — barely budged off the floor and new business growth was the slowest in two years.
The more important story is on prices. Output prices jumped the most since mid-2022 and input costs are running at an 11-month high, with supply chains snarling up in a way we haven't seen since the post-pandemic mess. Williamson sums up the Fed's problem nicely:
"Balancing the risks of inflation lifting sharply higher against the underlying weakness of economic growth presents policymakers at the Fed with a growing dilemma. However, it will likely be increasingly hard to make a case for rate cuts if inflation follows the path signalled by the PMI while the economy continues to eke out only modest growth."
Translation: stagflation risk is back on the menu. The market has been pricing in cuts on the assumption that war-driven weakness would give the Fed cover to ease — this report pushes hard the other way. Sub-1% growth with spiking prices is exactly the corner the Fed doesn't want to be painted into.
This article was written by Adam Button at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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