US Business Activity Slows in April, ‘Economic Activity Lost Momentum’

Business activity in April expanded at the slowest pace seen this year, according to the S&P Global flash April composite index.

The pullback in demand led to the first decline in employment since 2020, raising alarms about the health of the economy.

The composite index, which provides a comprehensive view of output from both the manufacturing and service sectors, dropped by 1.2 points to 50.9, marking the most substantial decrease since August.

While readings above 50 still signify growth, the sharp decline and the first contraction in the composite measure of orders in six months paint a picture of an economy losing steam.

Chris Williamson, a prominent economist at S&P Global Market Intelligence, offered his insights on the troubling data. “The US economic activity lost momentum at the start of the second quarter,” he remarked, pointing to the falling inflows of new business and the slipping expectations of firms regarding future output.

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The growing concern about the economic outlook is palpable, and businesses are taking notice.

Perhaps the most alarming aspect of the report was the precipitous drop in the employment measure.

Sliding 3.2 points to 48, the index reflected a contraction in services payrolls and a deceleration in manufacturing job growth.

Williamson pulled no punches in his assessment, stating that “the more challenging business environment prompted companies to cut payroll numbers at a rate not seen since the global financial crisis if the early pandemic lockdown months are excluded.”

This decline in employment suggests that companies are adjusting their workforce to match the current level of demand, as evidenced by the persistent contraction in order backlogs.

The service sector, a vital component of the US economy, faced its own set of challenges.

New business shrank for the first time since October, with some firms pointing to the double whammy of higher borrowing costs and elevated prices as the culprits behind the diminishing demand.

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The overall index for services activity plummeted to a five-month low, while the manufacturing PMI dipped into contraction territory.