U.S. Activity Grows a Little More Slowly in April, PMIs Suggest

By Joshua Kirby

U.S. private-sector growth weakened a little this month, suggesting the economy may be losing a little steam as the Federal Reserve dampens expectations for cuts to interest rates.

Tuesday's S&P Global Flash U.S. Composite PMI--which gauges activity in the manufacturing and services sectors--slipped to 50.9 in April from 52.1 in March, marking its weakest point in four months. Both manufacturing and services deteriorated, with factory activity contracting on month for the first time this year.

The readings for both sectors were worse than economists had expected, according to a poll conducted by The Wall Street Journal.

Activity nevertheless continued to grow overall, suggesting only a little squeeze from high interest rates. Annual inflation has continuously gained pace since January and the labor market remains tight, with sizable numbers of new jobs added every month this year and joblessness among its lowest levels this century.

Amid this unexpected strength, the Fed has moved to dial down expectations for rate cuts, which had previously been widely expected to start this summer.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

April 23, 2024 10:14 ET (14:14 GMT)

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